Oral Answers to Questions

NORTHERN IRELAND

The Secretary of State was asked—

Decommissioning

Andrew Robathan: If he will make a statement on progress by participants in the Belfast agreement in using their influence to achieve the decommissioning of all paramilitary arms.

Geoffrey Clifton-Brown: If he will make a statement on arms decommissioning.

Ian Pearson: It is essential, as the Prime Minister, Taoiseach and others have made clear, that all aspects of paramilitarism are put behind us in Northern Ireland. The decommissioning of paramilitary arms is an essential part of that objective and at the heart of our dialogue with the Northern Ireland political parties. I am happy to note that the Ulster Defence Association has engaged with the Decommissioning Commission.
	There have been four acts of decommissioning to date, the latest of which occurred on 21 October 2003, when the Independent International Commission on Decommissioning reported that it had witnessed a third event in which IRA weapons were put beyond use.

Andrew Robathan: The Minister will have recognised the direct quote from the Belfast agreement. He will know perfectly well that, according to the agreement, "total disarmament" was expected by 22 May 2000—four and a half years ago. When will he stop listening to the lies of Sinn Fein—[Interruption.] Does anybody doubt that they are lies? The lies are inextricably linked to the IRA. Sinn Fein promised total disarmament six and a half years ago. When will he hold Sinn Fein and the IRA to account?

Ian Pearson: I have no problem in agreeing that Sinn Fein and the IRA are inextricably linked, but the hon. Gentleman's comments are not helpful at this delicate stage of the talks process, and it would be inappropriate to comment further.

Geoffrey Clifton-Brown: We are, I hope, on the eve of an historic agreement between the parties in Northern Ireland, a critical part of which is the decommissioning process. Does the Minister agree that if all parties wish to participate in the democratic process, they must accept that the armed struggle is over and that we should have a clear and verifiable path to decommissioning? In saying that, we focus on the IRA and its associates, but should we not also focus on the decommissioning of loyalist paramilitaries?

Ian Pearson: I agree. To use a rugby analogy, we are going up the pitch and are camped out on the 5 yd line. We are tantalising close to achieving what I believe will be a long-lasting peace settlement in Northern Ireland. The hon. Gentleman is right to point to the fact that all paramilitary organisations, both republican and loyalist, must decommission and give up the path of violence completely. That is why I am very pleased that the UDA has decided to engage with the Decommissioning Commission. We as a Government will continue to exert any influence we can on all paramilitary organisations to decommission.

Peter Robinson: I support the Minister's views on loyalist paramilitaries and the need for them to follow any initiative that might be taken by the Provisional IRA. Although he may not have found our comments helpful, they do, none the less, reflect a sincerely held degree of scepticism in Northern Ireland about the behaviour of the Provisional IRA. Therefore, any act of decommissioning must be not only conclusive and verifiable, but transparent in a way that has a visual aspect, so that the day afterwards no one in the House or outside has any doubt that the event occurred.

Ian Pearson: Again, I am happy to agree. Public confidence in the decommissioning process is important. I recognise that greater transparency is required if both sides of the community are to be satisfied, and, as the hon. Gentleman will be aware, that is under detailed discussion.

David Trimble: May I, first, endorse entirely the final words of the hon. Member for Belfast, East (Mr. Robinson) about decommissioning? What he describes is simply the complete implementation of the Belfast agreement.
	General de Chastelain and his colleagues on the Independent International Commission on Decommissioning have no obligation under the Northern Ireland Arms Decommissioning Act 1997 or the scheme made under that Act to keep the details of decommissioning secret. Will he urge the general to publish details of what has happened and what may happen, without worrying too much about the views of the paramilitaries concerned?

Ian Pearson: I note the right hon. Gentleman's comments. The scheme and the regulations allow for confidentiality at the request of participants. I reaffirm the Government's confidence in the integrity and the abilities of General John de Chastelain. We recognise as a Government that public confidence in decommissioning is important. Discussions are ongoing and it would not be appropriate for me to comment further.

Eddie McGrady: So far, the Minister has referred mainly to paramilitary arms. Does that indicate a change of opinion from the one expressed in the joint declaration, which stated that all paramilitary structures and other activities—criminal activities and so on—are covered by the term "decommissioning"?
	How does the Minister respond to the fact that, although the Northern Ireland Office welcomed the UDA ceasefire some weeks ago, yesterday five UDA members were charged with conspiracy to kidnap? People with whom he has been negotiating were in court cheering on those who were accused of paramilitary and illegal activity. Does not that tell us what the people of Northern Ireland will think of both types of paramilitary organisation and their so-called decommissioning, not only of weapons, but of criminal and intimidating activity?

Ian Pearson: My hon. Friend is right to point out that decommissioning is only one element—albeit an important one—of the process of removing violence permanently from politics in Northern Ireland, which is what we all want.
	As for the UDA, I do not wish to comment on a matter that is before the courts, but I will say that I welcome the arrests that the police have made. Paramilitary organisations must recognise that neither the Government nor the people of Northern Ireland will tolerate the crimes that they commit being treated any differently from ordinary crimes. The Secretary of State has made it clear in talks with the Ulster Political Research Group that that remains the Government's position. We have said before that we will judge the UDA on its actions, not on its words, and we will continue to do so.
	On a more positive note, there are early signs of a decrease in paramilitary assaults since the UDA's statement. I welcome that.

Hugo Swire: This is really a question for the Secretary of State, but he is curiously silent this morning, so I shall address it to the Under-Secretary. Does the hon. Gentleman agree that until there is verifiable and transparent decommissioning of all arms and paramilitary infrastructures, it would be most unwise to dismantle the existing security and military infrastructures in Northern Ireland?

Ian Pearson: We are only on Question 1, and I am sure that my right hon. Friend will speak at some point. As for the hon. Gentleman's substantive point, the Chief Constable and the General Office Commanding keep the security situation under continuous review and ensure that we have the resources required to meet the threat assessed.

Cross-Border Trade

Hugh Bayley: What effect the recent depreciation of sterling against the euro has had on cross-border trade with the Republic of Ireland.

Barry Gardiner: The exchange rate between sterling and the euro has been relatively stable in recent years. Between June and October 2004, sterling depreciated by 3 per cent against the euro. Given that the depreciation is very recent, it is not expected to have had a significant impact on cross-border trade between Northern Ireland and the Republic of Ireland.

Hugh Bayley: The growth in trade and investment and the record number of jobs in Northern Ireland that have come from that are among the real benefits to have emerged from the peace process. Does the Minister recognise that political certainty creates the right climate for investment and that the restoration of devolved government would create that certainty and therefore encourage further prosperity in Northern Ireland?

Barry Gardiner: My hon. Friend is correct. The stability brought about by the Good Friday agreement has resulted in a staggering increase in foreign direct investment in Northern Ireland in the past two years—a total of about £1 billion, in fact. Major world companies, including Northbrook Technology, HCL and Citigroup, have decided to locate in Northern Ireland. They have helped to create 60,000 new jobs in the past five years, and the unemployment rate has fallen from 5.7 per cent. to 5.1 per cent. and then to 4.7 per cent. There has been a staggering improvement in the Province's economy.
	There has been a 90 per cent. increase in the number of tourists visiting Northern Ireland. Tourists see it as a destination that is safe and good to visit.
	Those are all benefits of stability. The hon. Gentleman is right that the restoration of the devolved Assembly would be a tremendous signal to investors and tourists that Northern Ireland is on track and is a place to do business.

Jeffrey M Donaldson: Speaking of jobs, I hope that the Minister will welcome the prospect of 1,000 new jobs at the proposed John Lewis department store in Sprucefield, which will have the benefit of attracting cross-border trade. Does the Minister recognise that we are competing with Dublin for this project and that Departments in Northern Ireland must make every effort to secure this investment for the Province?

Barry Gardiner: Yes. The hon. Gentleman will know that a planning application has been made and that it would not, therefore, be right for me to comment on it, although I understand that it is being dealt with as expeditiously as possible. The hon. Gentleman is right about large companies locating in Northern Ireland: they bring with them jobs and prosperity, which is what we want. Business is confident that it can invest in Northern Ireland and make money. I have in mind the companies that I have visited recently, such as Andor Technology, a home-grown company, and Montupet and Michelin. It is clear that companies see Northern Ireland as a very good place to locate and do business in the single market in Europe.

George Foulkes: Is the Minister aware that when I was in Derry recently the euro was readily accepted in shops, hotels and taxis, and that Northern Ireland is in the vanguard of acceptance of the euro? Is it not about time that the Government met the five tests and that we get into the euro as quickly as possible?

Barry Gardiner: My right hon. Friend will appreciate that the five tests are beyond my ministerial portfolio. He is right to highlight the fact that in Derry and other parts of Northern Ireland it is extremely important that we offer tourists what they want, part of which is being able to do business in euros—people expect that when they come from Europe. Northern Ireland is the only part of the United Kingdom that shares a land border with the eurozone, so it is doubly important that such a facility is available. That shows, once again, the strides that tourism is making in Northern Ireland to meet customers' needs.

Peace Process

David Burnside: How many parties represented in the Stormont Assembly retain links with terrorist organisations; and what his latest estimate is of the terrorist threat posed by such links.

John Barrett: If he will make a statement on the peace process.

Paul Murphy: Intensive dialogue on political advance between the British and Irish Governments and the Northern Ireland parties continues. We have in that context put to some of the parties the detailed proposals of the two Governments on the best way forward. We await a response.
	The Independent Monitoring Commission has identified associations between the leadership of paramilitary groups, and Sinn Fein and the Progressive Unionist Party. I do not believe the links of themselves increase the threat of terrorism, but it is essential that paramilitarism itself should come to an end.

David Burnside: I thank the Secretary of State for that answer. Last month a leading member of Sinn Fein was jailed for four years in the Irish Republic for spying on democratically elected politicians in the south of Ireland—an incident similar to the one that led to the closure of the Stormont Executive and the operational Assembly. The month before, in October, the police believe that the IRA-republican movement were involved in a £1 million robbery of cigarettes in south Belfast. Does the right hon. Gentleman believe that the ordinary people of Northern Ireland can tolerate republican criminals being placed in the Executive of Northern Ireland? Does he not realise that ordinary Unionists and people on the ground, irrespective of the views of some political leaders, are totally against Sinn Fein-IRA republican terrorists being in the Government of Northern Ireland?

Paul Murphy: I think that the ordinary people of Northern Ireland would agree that we must tackle criminality in all its forms very robustly. I agree that people who are accused of crimes and are found guilty should be dealt with according to the law. However, I also think that the ordinary people of Northern Ireland want a future based on power sharing between nationalism and Unionism. I believe that everybody in Northern Ireland would like the restoration of their Assembly and Government and, to that end, I applaud the work of all the parties that are trying to ensure that that happens. I am sure that the hon. Gentleman agrees that it is far better to have a Northern Ireland Assembly and Executive than direct rule.

John Barrett: What steps is the Secretary of State taking to ensure that the current talks include supportive parties such as the Alliance party, not just the Democratic Unionist party and Sinn Fein?

Paul Murphy: The Good Friday agreement was made between all the parties in Northern Ireland that were at the talks, so it is important that any agreement is as inclusive as possible. Sinn Fein and the DUP are the biggest parties in their respective communities, so they have an important role to play because of their electoral mandate. The other parties, too, have an extremely important role to play, and we cannot go forward unless there is consensus among them. I met the leader of the Alliance party in recent weeks. Indeed, I met its deputy leader yesterday, and the Alliance party is meeting the Prime Minister today in Downing street.

Seamus Mallon: The outgoing Metropolitan Police Commissioner, Sir John Stevens, has stated on the record that there were substantial links between Northern Ireland authorities and an illegal paramilitary organisation, and that that collusion resulted in a number of deaths, including that of Pat Finucane. Does the Secretary of State agree that the public and the family of Pat Finucane have a right to know what those links are and how long they lasted? Does he further agree that the links between the authorities and a terrorist organisation can be properly established only by a fully independent tribunal that deliberates in public and has no restrictions placed on its findings?

Paul Murphy: My hon. Friend is right that everybody in Northern Ireland wants to find out the truth and what happened. I agree, too, that the only way to do so is through a genuinely independent tribunal that looks at the issues. He knows, of course, that when Judge Cory looked at those issues and at whether the tribunal should meet in public or in private, he said that as far as possible it should do so in public but that, inevitably, because of issues of national security, it would not always be possible. My hon. Friend also knows that the inquiries Bill will soon come before the House, so he will be able to scrutinise that measure and make his points. I agree absolutely that we must find the truth and that there is no excuse whatsoever for collusion.

Nigel Dodds: Does the Secretary of State accept that Sinn Fein must get rid of all the weapons of terrorism in a credible, verifiable and transparent way and that there must be a complete end to the criminal and other activity that occurs daily? Otherwise, democrats in Northern Ireland must move on without Sinn Fein, and will there be a Government commitment to that effect?

Paul Murphy: It is not just the Government who committed themselves—the Good Friday agreement itself said that the only way forward in Northern Ireland was through non-violent and peaceful means. Clearly, decommissioning is an important part of that. We have just had exchanges across the Floor about how that should happen, and I agree not only that decommissioning must be final, full and transparent but that everybody must have confidence in the way in which it is carried out. He is also right that there must be an end to paramilitary activity by all sides in Northern Ireland. Until we get there, we will never have a properly democratic society. He also knows, because he has been involved in recent negotiations, that those important issues are currently being discussed. I sincerely hope that in the days ahead we will resolve those difficulties and secure an agreement that will ensure that we have an Assembly and an Executive in Northern Ireland very soon.

David Lidington: Does the Secretary of State share my sense of exasperation that 10 years after the first ceasefires were agreed, parties linked to paramilitary organisations are still able to impose political control on certain areas by resorting to violence, intimidation and crime? Must we not insist that, to get terrorism out of politics altogether, we must see the end of paramilitary structures and organisations so that people everywhere in Northern Ireland and from all parties look to the police and the courts, not to the paramilitaries, to enforce the law and see justice done?

Paul Murphy: The hon. Gentleman is absolutely right in everything he says. He can rest assured that those principles lie at the heart of the current discussions and negotiations between the parties and the Governments. I sincerely hope, as I have just said, that the discussions will be fruitful and that we will resolve those issues.

David Lidington: I thank the Secretary of State for that assurance. Will he bear in mind in the negotiations people's fears, particularly in areas such as South Armagh and parts of Fermanagh, that a reduction in the number of soldiers and the removal of watchtowers might expose them to the sort of terrorist threat that is still alive in those areas and from which their families have suffered for many years? Will the Secretary of State make it clear that the Government will place the security interests and the defence of the people of Northern Ireland ahead of any need for political gestures to republican parties?

Paul Murphy: It is not about political gestures. If there is normalisation in Northern Ireland, which again is part of the Belfast agreement, it has to be based on a genuine move by paramilitaries. Normalisation features prominently in the current discussions. I agree that people's security should be uppermost in any Government's mind, but if we have an agreement—if there is movement in the way that we want it to happen—we want a normal society in Northern Ireland, whether in South Armagh or any other part of the province.

Religious Bigotry

Graham Allen: What steps he has taken to combat religious bigotry in schools.

Barry Gardiner: Let me make it clear that there is no place for intolerance in schools, and schools in Northern Ireland have been in the forefront of tackling the issue. I condemn any form of prejudice in society and commend the efforts made by schools and teachers to help overcome it—for example, through integrated education and elements of the curriculum such as education for mutual understanding, cultural heritage, religious education and, in the future, the citizenship programme that will be coming into our curriculum.

Graham Allen: The Minister will be aware that the Secretary of State for Education and Skills has issued guidance to schools in the UK that they should offer a broad-based education in religious and other life-value systems so that youngsters get a broad idea of different views. Does that apply in Northern Ireland, the place where it is probably most needed? If not, what other steps does the Minister propose to ensure that youngsters from both communities can receive an inoculation against the religious bigotry that infests their communities?

Barry Gardiner: We already have in schools in Northern Ireland cross-curricular themes such as education for mutual understanding and cultural heritage, which are doing tremendous work in bringing children together and helping them to cope with the different traditions that exist there. From September 2006, the revised curriculum, which I have accepted, will bring citizenship in as a compulsory element at key stages 3 and 4. That will include topics such as diversity, inclusion, equality and human rights. My hon. Friend will be well aware of the number of integrated schools in Northern Ireland, which are also doing tremendous work. They have a combined enrolment of 16,000 pupils already. Much good work is going on in the denominational schools as well to ensure that children cope with the pressures in society.

Lembit �pik: Has the Minister read the report of the Joint Committee on Human Rights, which says that the unavailability of unsegregated education might raise education rights issues? The Government say that they are in favour of choice. In the light of the overwhelming demand and substantial under-provision, will the Minister make a commitment that every parent who wants to send their child to an integrated school will have that opportunity in Northern Ireland?

Barry Gardiner: The hon. Gentleman knows that the Government are obliged not to promote any particular form of education, but to encourage and facilitate any form of education in accordance with the wishes of parents. He also knows that different schools will place pressure upon the rolls of other schools at a time of changing demography. The Department of Education in Northern Ireland has to balance those issues to allow all parents to ensure that their children get the education that they deserve.

PRIME MINISTER

The Prime Minister was asked

Engagements

Crispin Blunt: If he will list his official engagements for Wednesday 1 December.

Tony Blair: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Crispin Blunt: On Monday, the Government-appointed South East England regional assembly rejected the Deputy Prime Minister's plans for concreting over the south-east. In the new year, the Deputy Prime Minister will re-impose his plans on the south-east. Will the Prime Minister explain the point of that body, which the Deputy Prime Minister will ignore, as he ignores our properly elected local councillors, who are infinitely more capable of deciding housing numbers in their own areas?

Tony Blair: The South East England regional assembly is responsible at this stage for examining alternative options for the development of the south-east. We are at an early stage in the process and should take it one step at a time. Let us be clear that anyone who looked at housing supply in this country would recognise the need to build more homes in the south-east. We need to build more homes, the majority of which will be on brownfield sites. We will protect the green belt, but those hon. Members who suggest to their constituents that more homes are not required are simply misleading them.

Ronnie Campbell: The Prime Minister will be aware that more than 500 jobs have been lost at Swan Hunter on the Tyne. Can he help those men by getting orders into that shipyard to get them back to work?

Tony Blair: We are doing our best to make sure not only that we get the necessary orders for the Swan Hunter plant and for other plants, but that anyone who is made redundant is given full help in order to be able to retrain and get another job. Exactly the same package of measures that has been put in place in my constituency and other constituencies where jobs losses have unfortunately occurred will be put in place there. From my experience in my constituency, I know that that package of measures is immensely successful in getting people new jobs. Since the Government have been in power, I am glad to say that we have 2 million more jobs in this economy. People remember the days when unemployment was 3 million and people had no help to get new jobs.

Michael Howard: On Monday, the chairman of the Committee on Standards in Public Life repeated the Committee's view that allegations against Ministers should be considered by members of an independent panel, drawn up in agreement with the Opposition, which would be ready to act whenever an allegation is made. That recommendation was originally made in April 2003, and the Prime Minister rejected it. Will he now reconsider it?

Tony Blair: No, for the reasons that we gave at that time. We believe that it is better, if an allegation is made, to appoint people on an individual basis and not to have a standing panel. That is the right way to do it. In this instance, we have someone of unimpeachable integrity who will examine all the facts of the case and come to a conclusion.

Michael Howard: Let me tell the House what Sir Alistair Graham, the man appointed by the Prime Minister to chair this important Committee, said a couple of days ago:
	The Committee was disappointed that the current Government did not take the opportunity to put this mechanism in place, particularly as it provides speedy and independent investigation of allegations against Ministers. Current events demonstrate the continuing practical relevance of adopting these recommendations.
	The Prime Minister said that he wanted the highest standards in public life. He appointed the Chairman of the Committee on Standards in Public Life. The Committee has made clear recommendations. Why has not the Prime Minister accepted them?

Tony Blair: We did not accept this recommendation because we believe that it is better to appoint people on an individual, case-by-case basis. The right hon. and learned Gentleman talks about the speed of the inquiry's being set up, but the allegations were made on the Sunday in the newspapers, and that day, at the insistence of the Home Secretary, somebody was appointed to examine them. I hope that the right hon. and learned Gentleman agrees that Sir Alan Budd is a man of independence and unimpeachable integrity. He will have the opportunity to look at the facts of the case and to make those facts known to the public. I cannot see what is wrong with that way of proceeding.

Kali Mountford: Is there not a huge amount of untapped potential in our secondary schools? When my right hon. Friend looks at schools' results, will he see what more can be done to ensure that that untapped potential is a resource for the community and that an arbitrary cap is not put on it?

Tony Blair: I entirely agree that there is still a great deal to do in improving the standards in our school system. However, in her constituency, as in other constituencies up and down the country, we now have the best ever primary school results, the best ever GCSE results and the best ever A-level results. As opposed to the previous Conservative Government, who in the time before they left office were actually cutting spending per pupil, we have increased it by 800 per pupil in real terms since taking office. That is the difference between a Government who believe in education and a Government who do not.

Charles Kennedy: How much will each individual end up having to pay for their identity card?

Tony Blair: As I have already explained, the reason we should introduce identity cards is that in any event we will have to introduce biometric passports. Of the 85 cost, 70 is attributable to the biometric passport, and only 15 to the additional amount for the identity card. Given what that does for us as a country, in terms not only of security but of access to services and tackling issues such as illegal immigration, I think that that is money well spent.

Charles Kennedy: Two years ago, the Home Office said that the entire scheme would cost 3 billion. Two days ago, it said that the revised estimate, which is not a final maximum figure, was now running at almost twice that amount. Given the history of this Government when it comes to introducing complex information technology systems, not least for the Child Support Agency and tax credits, will the Prime Minister rule out any company that has had its hands in those fiascos having anything to do with identity card systems? Does not all this, financially and in terms of potential complication for the individual citizen, have all the hallmarks of another Government fiasco in the making, with the individual being left to pick up the tab?

Tony Blair: The right hon. Gentleman is simply wrong on the costs. The ID card element is around 85 million a year, and that is spread over several years.
	Let me go back to the point that I am trying to make to him. In any event, because many countriesthe United States, those in Europe and elsewhereare introducing a requirement for biometric visas, it is important that we introduce biometric passports here. That will already mean considerable change over the next few years. It makes sense in those circumstances, given the new biometric technology, also to have an identity card. The additional cost of that is quite small in relation to the overall cost. We think it is necessary not only because of issues to do with security and terrorism but, as I said to the right hon. Gentleman a moment ago, because of issues relating to access to servicesfor example, ensuring that people who use the national health service are entitled to do so.
	We think that it is legitimate and right, in this day and age, to ask people to carry identity cards, and that is why we will proceed with it. However, there will be a very full debate in the House of Commons.
	I think that Sir David Steel got it right. When he was asked about it, he said:
	I don't quite take the party line on this . . . I think the people will find them very useful.

Lorna Fitzsimons: Is my right hon. Friend aware of the huge anger and disappointment in my constituency about the eleventh-hour proposal from the director of infantry to cut the Royal Regiment of Fusiliers? My right hon. Friend knows about the huge recruiting footprints in towns such as Rochdale that the Lancashire Fusiliers and the Royal Regiment of Fusiliers have had. Will he assure me that the top four success criteria, which the Army Board set out, will be adhered to, thus kicking the poor decision into touch?

Tony Blair: I assure my hon. Friend that no decisions have yet been taken on the future of the Royal Regiment of Fusiliers. She knows that the review is being conducted by the Army, which wants to ensure that it maintains the traditions of the regiment and much of the history to do with it, which is tremendously valuable to people, but have greater flexibility in the way in which our armed forces are deployed. That is the balance that it is trying to strike. The Army should be allowed to reach its decisions, which it will do over the next few weeks. I think and hope that, once the decisions are properly explained to people, they will accept their wisdom.

Bill Wiggin: On 21 June, the Prime Minister wrote to me following two tragic road deaths at Ashton in my constituency. He said that the Highways Agency would consider what measures would improve safety at the location. On 13 August, the Under-Secretary of State for Transport wrote to tell me that the Highways Agency would report in two months. He said the same on 13 September and on 16 November. On 17 November, Ian Lycett was killed at Ashton in the same place. Does the Prime Minister wonder why people say that he is all talk?

Tony Blair: First, I should like to express my deep regret about what has happened to the hon. Gentleman's constituent and to others who have been killed at that place. I am not aware of the subsequent correspondence. I shall have to look into it and get back to him.

Hugh Bayley: Will the Prime Minister join me in paying tribute to Mrs. Rosy Garnett from York, who today will receive a cheque for 1,000 as a reward for taking a stand against drug dealers in her neighbourhood and giving evidence against them in court? Does he agree that it is essential to maintain strong crime fighting partnerships between the police, the local authority and the public, such as the Safer York partnership, and will the Government fulfil their part of the bargain by continuing to provide additional resources for the North Yorkshire police?

Tony Blair: First, I congratulate Rosy Garnett and all those others who have won awards for taking a stand against antisocial behaviour. In my hon. Friend's constituency and in many others, the new legislation has been well used by the police, local authorities and, most important, local people. There are also record numbers of police officers in my hon. Friend's authority and elsewhere in the country. I assure him that we shall continue to supplement them with community support officers. When the idea of community support officers along with record numbers of police was first introduced in the House, many people opposed it. People are now beginning to see that community support officers are a worthwhile addition to our policing force.

Michael Howard: This week, yet another horrific murder occurred in London. Sadly, it was not an isolated incident: 211 people were murdered in London last year. The Prime Minister promised to be
	tough on crime and tough on the causes of crime.
	What has happened to violent crime and gun crime since he became Prime Minister?

Tony Blair: First, in respect of the horrific murder that took place a short time ago in London, I think we would all like to express our sympathy to the family concerned.
	According to the British crime survey, violent crime is down. It is correct that, on recorded crime, it is up. The right hon. and learned Gentleman knows that that is largely because of changes that have been made, for example, in recording domestic violence. Of course, violent crime and gun crime are too high. That is precisely why we have introduced new measures in criminal justice legislation to provide that anyone who is caught in possession of a firearm will be given a minimum sentence of five years.

Michael Howard: The British crime survey figures do not include murder, rape, drug offences or crimes against children, which is why the Prime Minister never mentioned them when he was Leader of the Opposition and why he then used the recorded crime figures only. On the recorded crime figures, violent crime is up by 83 per cent., 1 million violent crimes are committed every year and gun crime too has doubled. He said:
	We will increase the rate at which we catch and convict people.
	Can he tell us what has happened to detection rates since 1997?

Tony Blair: I do not have the figure in front of me for what has happened since 1997. I do have the figure for the last year, when the rate of detection increased. However, I have to say to the right hon. and learned Gentleman that the British crime survey is taken as the most authoritative crime survey overall. That is why it is used.
	In respect of crime, let me just remind the right hon. and learned Gentleman that when the Conservatives were in power crime doubled, and when he was Home Secretary police numbers fell. In relation to violent crime, when he was Home Secretaryon both recorded crime and the British crime surveyit rose, which is simply to say that this is an issue here and in many other countries. We are taking action on it. The new legislation that we are introducing now, as well as that which we have introduced over the past couple of years, has tightened the law considerably. We will continue to do it. Let me just draw the contrast: on any basis, crime under this Government has fallen; it rose and doubled under him.

Michael Howard: The Prime Minister, to make his point against the last Government, has just used the recorded crime figures. On those figures, crime fell by 18 per cent. when I was Home Secretary; it has risen by 16 per cent. under this Government. Now, let me tell him what has happened to detection rates under his Government. For violent crime, they are down 35 per cent.; for sexual offences, they have fallen by half; overall, detection rates have fallen by more than 10 per cent. since he took office.
	Criminals now have a better chance of committing a crime and getting away with it than at any time for the last 25 years. Now, the Prime Minister

Tony Blair: rose

Michael Howard: He will have to wait a moment longer.
	The Prime Minister promised to make criminals face up to their offending behaviour. How many crimes have been committed by prisoners let out before the end of their sentence on his early release scheme?

Tony Blair: First, let me just correct the right hon. and learned Gentleman. It is true that recorded crime went up under the last Conservative Government, but if he wants to take the British crime survey, it also went up by over 50 per cent. under the last Government. In respect of his record, I said that violent crime went up when he was Home Secretary, and it did. Recorded crime went up by 18 per cent. So, let us have no more from him about how he managed to achieve this great reduction when he was Home Secretary.
	The fact is that violent crime has been rising for a number of years. In relation to early release, fewer than 2 per cent. reoffend. These are people who are going to be released in any event. I might just say that when that early release scheme was introduced to the House, it was supported by everyone, including Conservative Members.

Michael Howard: More than 3,500 crimes have been committed by prisoners released early under this scheme. The Prime Minister says that that does not matter, because they are only 2 per cent. of the crimes committed in this country. That is a disgraceful thing to say, and it will be no consolation at all to the victims of those crimes. The failure rate under the early release scheme has almost doubled since the Home Secretary extended it. Is not it the simple truth that under this Prime Minister the fight against crime is being lost and crime is out of control?

Tony Blair: Let us just be quite clear: overall, crime has been falling, not rising. That is not simply my view; it is the view of any independent analyst who has looked at the crime statistics. It is also the case that crime doubled under the Conservatives or, if the right hon. and learned Gentleman wants to use the British crime survey, it rose by over 50 per cent.
	The point is that under this Government we have record numbers of police officers and the new antisocial behaviour legislation. We now have new measures on drugs and drug addiction and crime. We have community support officers. I did not say it does not matter if people commit crimes; of course it matters. It is no consolation to anyone who is a victim of crime to be told that crime has fallen, but neither is it any consolation to have a former Home Secretary who cut police numbers lecture the rest of us on crime when he was part of a Government who doubled it.

Colin Challen: Is my right hon. Friend aware that I have a remarkable and courageous constituent called Jane Tomlinson, who, despite being diagnosed with inoperable cancer, and despite the great pain that she suffers, has set about raising 1 million, and has almost achieved that total, for four organisations that help to alleviate the pain and suffering of those with cancer. Will he join me in paying tribute to Jane, and will he alsoperhaps the greatest tribute of allrededicate the Government's efforts to improve cancer services in the NHS?

Tony Blair: I would like to join my hon. Friend in paying tribute to the work of Jane Tomlinson in raising money for and awareness of cancer. She serves as a true inspiration to those suffering from cancer. I assure my hon. Friend that we will continue to make this a priority. Ninety-nine per cent. of patients with suspected cancer are now seen by specialists within two weeks of being referred by their GP, which is up from 63 per cent. in 1997. We are investing in the region of 600 million extra a year in cancer services, with more than 1,000 extra cancer consultants. Since 1996, premature deaths from cancer are down by 12.2 per cent., which represents 33,000 lives. We now have the fastest falling death rates in the world for lung cancer in men and breast cancer in women.

Gary Streeter: Can it possibly be right that after 500,000 of taxpayers' money has already been spent on establishing and promoting a new microsystems company in Plymouth, the entire project has now been lured to Scotland by the promise of additional grants, which are also out of taxpayers' funds? Apart from the crushing blow that that decision has caused to the economy of Plymouth, is it not a terrible waste of public money? If I write to the Prime Minister with more detail about this caseI do not expect him to know the detail todaywill he please investigate and find out whether a serious misuse of taxpayers' money has taken place?

Tony Blair: Certainly, I will examine the matter for the hon. Gentleman, but I cannot give him a guarantee as to what I will decide when I have done so.

Chris Ruane: Four years ago, on 23 December 2000, an 18-year-old student in my constituency was knocked down and killed by a taxi. On Monday this week, the papers informed us that the taxi driver intends to sue the parents of the dead boy for the trauma that he suffered as a result of that. I spoke to the parents last night, and they are devastated by the actions of this taxi driver. Does the Prime Minister agree that this is the compensation culture gone mad? What actions can be taken to curb such excesses?

Tony Blair: Obviously, I do not know the exact circumstances to which my hon. Friend refers, but if they are as he says, it is an extraordinary thing to have happen. The Government's view is that in relation to causing death by dangerous driving, it is extremely important that we toughen up the measures, not weaken them. I cannot comment on the particular case, and it would not be right for me to do so. Obviously, however, I agree with him on his general point that some idea of the compensation culture should not offend common sense.

Animal Rights Extremists

Michael Fabricant: What assessment the Government have made of the activities of animal rights extremists.

Tony Blair: The Government take the threat posed by animal rights extremists very seriously, and have taken every opportunity to make it clear that their illegal activities will not be tolerated. We are tightening up the law with provisions in the Serious Organised Crime and Police Bill, which it is important that we emphasise. First, it will introduce a new offence of protesting outside homes in such a way that causes harassment, alarm or distress to residents. Secondly, it will amend the Protection from Harassment Act 1997 to extend it to the harassment of two or more persons who are connected, such as employees of the same company. Thirdly, it will provide an additional power for the police to direct a protester to leave the vicinity of a home and not return to it within a specified period up to three months. I assure the hon. Gentleman that if we need to do so, we will legislate even further.

Michael Fabricant: I am grateful to the Prime Minister for his reply, and my constituents in Yoxall, Newborough and Newchurch, who have been terrorised by animal rights extremists now for five years, will also be grateful. We welcome the legislation, although, as with everything, the devil will be in the detail. But does the Prime Minister also accept that there are genuine animal rights campaigners? What does he say to those who read the pamphlet, Labour Britain: New Life for Animals, which made the pledge in 1997 that a Labour Government
	will support a Royal Commission to review the effectiveness and justification of animal experiments?
	Does the Prime Minister not stick to what he promised, or was that just talk again?

Tony Blair: I was going to say that we could dissect that question, but it is probably not the right thing to say.
	We pledged to ensure better welfare and better safeguards in animal experiments, and we delivered on that pledge. We have made sure that all experiments are conducted according to the tightest possible regulations. It is for precisely that reason that we are in a strong position to say to animal rights extremists that we have tough measures in this country, so there can be no justification whatever for harassing and intimidating people who are going about their lawful business.

Karen Buck: My constituent, Richard Belmar, has now spent nearly three years in Guantanamo Bay without charge and now with no hope whatsoever

Mr. Speaker: Order. I must stop the hon. Lady there. Questions must relate to animal welfare.

Engagements

Gregory Campbell: Yesterday two people were convicted in the Irish Republic. One was described as a branch secretary of Sinn Fein in Dublin. He was found in possession of surveillance details of Irish politicians. On 27 November 2002, the Prime Minister said in the House that everyone must be satisfied that violence had been given up for good. Does not yesterday's court decision in the Republic undermine that?

Tony Blair: I do not think that I can comment on the individual arrest or the details, but I can say that what I said back in November 2002 still holds. That is why we have not yet been able to get the devolved institutions in Northern Ireland up and running again. Let me make it clear again that there can be no place in a proper democratic Government for people who are engaged in paramilitarism. Let us hope that we can secure clear agreements on all sides that make it absolutely clear that the only basis on which people can participate in a devolved Government is a commitment, which they implement, to exclusively democratic and peaceful means.

Harry Cohen: Tomorrow, around midnight, will be the 20th anniversary of the Bhopal poisonous gas leak which killed thousands of people and is causing suffering to this day. Will the Prime Minister pledge to strive for a clean-up of the site, for proper compensation for survivors and families of victims, and for new law, regulations and safeguards to prevent industrial hazards, both nationally and internationally?

Tony Blair: I shall have to write to my hon. Friend to tell him what issues we have taken up with the Indian Government. Obviously the primary responsibility must lie with them.

Chris Grayling: In a moment I shall go downstairs to join two of the Prime Minister's closest friends, Carole Caplin and Jenny Seagrove, to continue our campaign against the food supplements directive and the threat to vitamin supplements in this country. Given that even the Prime Minister's close friends think that the Government have got this wrong, will he now act to remove the unwanted threat to vitamins taken by millions of people all over the country?

Tony Blair: As ever, we must proceed according to the science, and the position set out by the Government is the one that I support.

Paddy Tipping: Given that a massive school building programme was announced yesterday, that all the indications today suggest that primary school results will be excellent, and that tomorrow's local government settlement will put even more money into education, does the Prime Minister agree that it really is education, education, education? Is there not a straight choice between further investment in education in the future, and the bad old days of cuts under the Tories?

Tony Blair: I am glad that my hon. Friend has said that. In addition to the excellent school results, there has been record capital funding for our schools. Indeed, there will be 17 billion of capital over the next three years. It is possible to visit primary and secondary schools in any constituency and see the results of investment in extra classrooms, extra teachers, extra teaching assistants and, in many cases, new school wings or even new schools.
	According to the shadow Chancellor, there would be 35 billion-worth of cuts in spending over the next few years. Therefore, the choice is very simple: keeping up this investment in our schools system under this Labour Government, or returning to the bad old days of cuts under the Tories.

Alex Salmond: Does the Prime Minister understand the level of concern in Scotland caused by the Secretary of State for Defence's apparent dismissal of the substantive case for keeping historic Scottish regiments as merely the tartan question? How can Labour be trusted to represent Scottish interests if that is an example of the standard of senior Ministers' thinking? Does the Prime Minister accept that, ultimately, this will be a matter for his personal decision, and according to what time scale does he intend to make it?

Tony Blair: We have made it clear, as I said earlier, that we have got to balance the Army's requirement for more flexible deployment of troops with maintaining regiments' traditions. I have listened, and will listen, very carefully to what my hon. Friends say and to what Conservative and Liberal Democrat Members say. However, the idea that the Scottish National party should lecture us on the British Army is one of the most absurd that I have ever heard. If the hon. Gentleman had his way, there would not be a British Army. So we will take these decisions in the best interest of the British Army and the United Kingdom.

Point of Order

Andrew Turner: On a point of order, Mr. Speaker. On 27 October, the Prime Minister told my right hon. and learned Friend the Leader of the Opposition that millions of jobs depend on UK membership of the EU. On 2 November, I asked the Prime Minister what the evidential basis was for that assertion, and he referred me to an answer given by the Minister for Europe to my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) on 5 July. On looking at that answer, I discovered that all that it refers to is the number of jobs
	linked, directly and indirectly, to the export of goods and services to the European Union. [Official Report, 6 July 2004; Vol. 423, c.594W]
	Either the Prime Minister got his answer wrong or he got the reference wrong. What should I do about it, Mr. Speaker?

Mr. Speaker: There is nothing that I can do about it, but we are now in a new Session and the hon. Gentleman could table more parliamentary questions to the Prime Minister.

Orders of the Day
	  
	Debate on the Address

[Sixth Day]

Order read for resuming adjourned debate on Question [23 November],
	That an humble Address be presented to Her Majesty, as follows:
	Most Gracious Sovereign,
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament[Mr. George Howarth.]
	Question again proposed.

Economic Affairs

Mr. Speaker: I inform the House that I have selected for debate the amendment in the name of the Leader of the Opposition. Standing Order No. 33 provides that on the last day of the debate on the motion for an Address to Her Majesty, the House may also vote on a second amendment selected by the Speaker. I have selected the amendment in the name of the leader of the Liberal Democrats for that purpose. The vote on that amendment will take place at the end of the debate, after the amendment in the name of the Leader of the Opposition has been disposed of.

Oliver Letwin: I beg to move, as an amendment to the Address, at the end of the Question to add:
	but regret that the Gracious Speech contains nothing that will reduce regulation, cut excessive bureaucracy or give the taxpayer value for money; condemn the Treasury for sponsoring 70 new regulations per working day, for blocking real reform of public services and for the consequent failure to deliver cleaner hospitals, school discipline, controlled immigration, more police on the streets and a lower tax economy; further regret that the Gracious Speech contains no measures to reverse the Chancellor's punitive taxation of pension funds and reductions in tax incentives to save which have contributed to cutting the savings ratio by one third whilst household debt now exceeds one trillion pounds; are disturbed that more pensioners are means tested than ever before whilst 2 million pensioners live in poverty; note that the Treasury's failure to provide taxpayer value and the waste of billions of pounds on unnecessary expenditure means that another round of stealth tax rises is inevitable under this Government; and further deplore the fact that there are no measures in the Gracious Speech to reverse the Government's policy of high levels of regulation and taxation which have resulted in the UK slipping from fourth to eleventh in the international competitiveness league and having a lower GDP per head than Ireland..
	Before I begin discussing the main substance of today's debate, I want to make a few remarks about the Bills in the Queen's Speech relating to the economy. The Treasury's Bill on the merger of the Inland Revenue and Customs and Excise carries our general support, as the Chancellor is aware, although we remain concerned about its practical implementation. We are dealing with two organisations that have between them 250 legacy computer systems and some 13 million customers. It is no mean feat to put them together, and we will want to look at the details extremely carefully.
	Before dealing with the Bills relating to the Department of Trade and Industry, I want to point out that the Queen's Speech does not include two Bills that might conceivably have been expected to be included.
	One is the provision for real estate investment trust rights, and I hope that the Chancellor will confirm that clauses will be forthcoming to deal with the introduction of such rights either in the Finance Bill or by some other means. The Opposition believe that those new vehicles have a great deal to offer to our economy. We would want to ensure that the means by which they are introduced are not over-bureaucratic and restrictive, but we would want to support measures to introduce them into the capital markets.
	Also notable by its absenceit was not present in the Queen's Speechwas any reference to a statistics Bill. I hope that the Government will draw up proposals to deal with the issues raised by the Statistics Commission about the transparency of national statistics. We shall produce proposals in that connection in the next few weeks and I hope that the House will have the opportunity to discuss and debate such matters during this Session.
	In respect of Department of Trade and Industry legislation, the consumer credit Bill carries our general support. We are particularly keen to see some change in the extortionate credit test. As long as the Bill moves towards increasing transparency rather than imposing undue bureaucratic burdens, we will support its gist.
	The equality Bill is in much the same position. The CBI, as the Chancellor will be aware, has warned that the new proposed commission for equality and human rights could too easily become too concerned with enforcement, too bureaucratic and not sufficiently concerned with promoting good practice. We will want to see whether those dangers are apparent in the Bill and we will want to debate the provisions in Committee.
	I now turn to the main subject of today's debate. Tomorrow we will have an opportunity to see the Chancellor launch his personal election campaign with his customary brio and to discuss the very poor fiscal position that he is in. Today I want to take the opportunity to do something different and examine the Chancellor's economic record, which he is both pleased about and proud of. He frequently presents his economic record as being all for the best in the best of all possible worlds[Interruption.] Government Front Benchers seem to be very happy about the situation. The Chancellor tells us that it will go on getting better for ever.

David Cairns: Under Labour.

Oliver Letwin: Yes, indeed. Under Labour, as the hon. Gentleman says from a sedentary position: that is the mythology perpetuated by the Chancellor. The hon. Gentleman says that it is true, so let me read him and Government Members an alternative viewpoint. In respect of the Chancellor, this view states:
	His economic inheritance in 1997 was better than that of any previous Chancellor in living memory.
	I believe that the Chancellor once asked one of the Treasury officials whether he would like him to write a thank you letter for what had been done for the Chancellor before 1997. However, the person I am quoting continues:
	But there are limits to the length of time that public spending can increase at a faster rate than growth in GDP without causing problems. By the time I left Downing Street, Britain was approaching or had perhaps passed that limit. The regulatory burden had been increased, the tax system had become more complicated and the tax burden was rising too. Over the medium term, all this matters: it is easier for governments to mess up an economy than to improve it.
	That was, as the Chancellor has recognised

George Foulkes: rose

Oliver Letwin: Just a moment. Those were the words not of a Conservative spokesman or even of an independent person, but of someone who was working as the Prime Minister's economic adviser.

George Foulkes: On the question of messing up economies, on 1 March 2000perhaps it should have been 1 April 2000the right hon. Gentleman said:
	We made the most dreadful mistakes . . . we spent too much money in 1990 and we did many other things of which we are deeply ashamed.[Official Report, 1 March 2000; Vol. 345, c.492]
	Why should we expect anything better from the Conservatives next time?

Oliver Letwin: The right hon. Gentleman has the uncanny knack of falling into the very trap that I am seeking to set for him. It is perfectly true that we are willing to admit it when things go wrong. The problem that I am about to illustrate is the fact that the Chancellor does not know how to do that.
	The Chancellor is incapable of recognising that the inheritance we built up after the ERM fiascoI admit that it was a fiascowas the strongest inheritance that any Chancellor has had in living memory, as is attested by the Prime Minister's economic adviser. As that adviser points out, there is a question mark over the Chancellor's economic performance. Neither the right hon. Gentleman nor the Chancellor is very keen to admit it, so I shall go through the record.
	It is fair to say that the Chancellor is especially proud of his record on stability. He speaks about stability on almost every available occasion. That record of stability has two aspectsfiscal and monetary. However, the remarkable fact about both those forms of stability is that they are due to the fact that the Chancellor has allowed someone else to set the policy. His fiscal stability, which is now running outwe will talk about that tomorrowderives almost exclusively from the fact that for the first two years the Government's policy on spending was set by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the previous Chancellor, whose spending plans the Chancellor obeyed for two years. Had he not done so, he would not be within a million miles of adhering to his golden rule today. Indeed, he would be in the most terrible trouble.
	Monetary stability is admirable, but again that is because the Chancellor has allowed someone else to run monetary policythe Bank of England.

Gordon Brown: You opposed that.

Oliver Letwin: I personally never opposed the decision[Hon. Members: You did.] I did not. I was in favour of the decision from the beginning and I was part of the group of people who persuaded my party to adopt the position of being in favour of it. It was the right move. The point I am making about the decision, which the Chancellor is in no position to deny, is that the effect

Gordon Brown: You voted against it.

Oliver Letwin: One does things out of party loyalty that one does not necessarily[Hon. Members: Oh!] I have never personally opposed the decision. [Interruption.] I have been in favour of it[Interruption.]

Mr. Speaker: Order. It is very noisy. We must hear the right hon. Gentleman.

Oliver Letwin: The Chancellor is perfectly aware that the reason monetary stability has been achieved is that someone else has been running monetary policy, and that is a very good thing.

James Plaskitt: On the subject of fiscal stability, can the right hon. Gentleman remind us what proportion of GDP Government debt was when his party was in office?

Oliver Letwin: Fiscal stability has to do with obeying a set of fiscal rules, and the Chancellor would not have come close to obeying his fiscal rules had he not followed the policies of my right hon. and learned Friend the Member for Rushcliffe.
	If we want to find the policies that the Chancellor himself has adoptedhis policieswe have to look beneath the surface of the two forms of stability that have been created by other people. What do we see when we turn to the question of what the Chancellor himself has been responsible for? Let us take productivity.

Huw Irranca-Davies: Will the right hon. Gentleman give way?

Oliver Letwin: No, I am going to continue for a while.
	The Chancellor's pre-Budget report of 1998 said:
	Productivity . . . is a fundamental yardstick of economic performance.
	Well, what has his record been on productivity growth? It has dropped by a third. The Chancellor shakes his head. Why does the Chancellor shake his head? It is because here we have a classic case of the manipulation of statistics by the Treasury and the contrast between the way in which the Treasury does business and the way in which the Office for National Statistics does business. The Treasury uses the so-called underlying trend rate of growth of productivity and it seeks to persuade itself that the productivity growth rate is reasonable. But the ONS, which is not in this respect governed entirely by Treasury diktatsthank Godproduces a different series of actual productivity growth rates which show that they have dropped by a third.
	The Deloitte UK productivity indexthe latest figuresshows that productivity growth in the UK is now at its slowest for two and a half years and is below the EU average.
	Let us turn to competitiveness. The Chancellor has frequently told us that his great vision, which he has been adumbrating in various newspapers recently, is to increase Britain's competitivenessa very laudable ambition and one indeed that the 1997 Labour manifesto told us would be one of the Government's main hallmarks. It stated:
	We will build a new partnership with business to improve the competitiveness of British industry for the 21st century.
	[Interruption.] The Chief Secretary comforts himself with the illusion that he has done some such thing, whereas in fact the Government have brought about a condition in our economy such that we have dropped from fourth to 11th in the international competitiveness league, we have record trade deficits and we have lost790,000 manufacturing jobs. If that is competitiveness

Jim Knight: Will the right hon. Gentleman give way?

Oliver Letwin: Of course.

Jim Knight: I am most grateful to the right hon. Gentleman for his generosity. Does he accept that his plans to slash the business support programme of the Department of Trade and Industry by 500 million would damage British competitiveness?

Oliver Letwin: Absolutely not at all. The hon. Gentleman suffers from the most astonishing delusion if he believes that the Department of Trade and Industry is currently assisting British competitiveness. It is in fact the Department that has presided over the fall in our competitiveness. The DTI is causing extra costs for businesses through extra taxes and is producing astonishing little result. Our plans to reduce the bureaucracy of the DTI by four fifths will assist British business by reducing the tax on British business and by reducing the degree of unnecessary interference in British business, thereby promoting its interestslong overdue.
	Let us turn to growth. The Chancellor is proud of his record on growth, too[Hon. Members: Hear, hear.] Yes, his hon. Friends are very pleased about it, too, but they do not spend much time noticing that about six sevenths of the growth in the last quarter was due to the public sector. They do not do much comparison of our growth rates with countries that are growing fast. The Chancellor likes to compare us with the eurosclerotic zone; by those standards, he says, we are doing brilliantly. But what about the rest of the world? What about the other major English-speaking countries; how does our economic growth compare with theirs? It is slower than that in any other major English-speaking country. It is half the rate of growth in Ireland since 1997; our per capita income is now below that of Ireland. Why? Because in Ireland they have been following quite different economic policies from those of the Chancellor. They have gone for low regulation and low tax and have ended up with people investing in Ireland. The Chancellor has not achieved a similar growth rate because his policies were not designed to the same ends.

Rob Marris: The right hon. Gentleman talks of low regulation in Ireland and the Conservative amendment refers to reducing regulation and cutting excessive bureaucracy, so can he give the House three examples of regulation that should be abolished forthwith?

Oliver Letwin: I can give the hon. Gentleman not three but thousands and thousands of examples. I will send him a very long list. My hon. Friends and I do not intend merely to cut regulation; we intend to cut the drivers of regulation. We intend to change the culture that creates regulation by cutting the bureaucracies that produce it. As the hon. Gentleman wants to talk about regulation and the question of what we shall abolish, he tempts me to move immediately to the very question of the Chancellor's statements about regulation[Interruption.]

Huw Irranca-Davies: rose

George Foulkes: rose

Mr. Speaker: Order. The right hon. Gentleman is not giving way.

Oliver Letwin: I was referring to the Chancellor's statements in the last pre-Budget report. He did not limit himself to three regulations. No, he said that he would abolish 147 regulations. Some interesting facts have come to light about those 147 regulations. The starting point of that interest is that the Chancellor was for onceI think it was uniqueunduly modest.
	Actually, when we got hold of the list it turned out that he was claiming to be abolishing 159.

George Foulkes: rose

Oliver Letwin: I am sorry; the right hon. Gentleman has already intervened once and he did not do very well last time. I am not going to give him another go.
	The Ernst and Young team looked at what the Chancellor had suggested and they said this:
	Unfortunately, with one hand the PBR adds much more to the regulatory burden than it subtracts with the other . . . The PBR announcement of an enquiry into reforming or reviewing 147 different regulations was announced with optimism . . . the devil was . . . in the detail: only 25% of the 147 referred to tax and red tape issues.
	In fact, the Ernst and Young team were pretty kind to the Chancellor, because when we asked parliamentary questions of the Treasury, the Treasury was able to name only one business measure in the 147, and when we checked on that measure, it turned out that it had already been announced in 2000 and again in 2002, and that it was not in the list of 147 or 159. So we asked

Huw Irranca-Davies: rose

Oliver Letwin: No, I am not going to give way; I am going to continue this rather amusing sequenceamusing to me. So we asked the DTI, and for once we got a parliamentary answer from that Department. I do congratulate any DTI Minister who may see this set of remarks in Hansard on the fact that we got an answera very unusual thing to get from the DTI. And what did it tell us? It told us that there were six of the 147 or 159 that it would like to name. Unfortunately, five of the six were not in the list of 147 or 159. But one wasthe Price Marking Order 2004. We went to look at it, and we got the regulatory impact assessment relating to it. What did it show? It showed very clearly that this measure increased the costs on business by 20 million; it did not reduce them at all.
	If there is a problem about mentioning regulations that are for abolition, the problem lies with the Chancellor. From 1998 up to the end of 2003, the Government have passed 23,322 new regulations. I admit that in this one respect the motion is insufficiently generous to the Government, because that translates into 70 per week or 15 per working day, which is an increase of 53 per cent. on the figures for 1979 to 1996.

Huw Irranca-Davies: rose

George Foulkes: rose

Oliver Letwin: I will not give way for the moment; I intend to make progress.
	The fact is that the Government have produced these dismal figures on productivity, competitiveness and growth in very large part because they have over-regulated our economy. They have overtaxed our economy, with 66 tax rises including many on business. The CBI, which has assessed the annual business tax bill at 54 billion in the year 2005-06 on current trends, points out that this is a rise of 7.6 billion from 1997, and adds that to the cost of the additional regulations to show that this Chancellor, who prides himself on being a friend of business, has actually added 15 billion a year of costs through extra regulation and extra tax on business.
	There is somebody who is not one of the Prime Minister's advisers, and never was one of the Prime Minister's advisers, who had something to say about this problem of excessive tax and regulation on business. He said:
	An incompetent economy ends you up with higher taxes. A high tax economy is a low success economy.
	That was not one of the Prime Minister's advisers; that was the Prime Minister, in 1994.
	The fact is, of course, that the Chancellor does not like listening to the Prime Minister and he did not listen to him about that. This is the Chancellor who has imposed tax and regulation on business.

George Foulkes: rose

Oliver Letwin: But it is not just by regulating and taxing that the Chancellor has undermined the foundations of our economy. The tale is even worse when it comes to savings and pensions. Next to the Chancellor sits the new Secretary of State for Work and Pensions, and he prides himself no doubt on presiding over some kind of miracle of savings and pensions. That is not the view of the right hon. Member for Birkenhead (Mr. Field), who very rightly pointed out that in 1997, just as we had the best inheritance of any Chancellor in living memory, we had the best system of savings and pensions in western Europe, and now, in the right hon. Gentleman's memorable phrase, we have one of the worst.
	Our savings ratio has dropped by a third; it is now half the EU average. We have a massive imbalance in the economy, with a low propensity to save and a high propensity to borrow, and about 1 trillion of household indebtedness. We all know what has happened. There is the 5 billion a year raid on the pension funds, there is the reduction of the tax advantages of saving in individual savings accounts compared with tax exempt special savings accounts and personal equity plans, and there is the vast expansion of means-testing, which has provided a huge disincentive to saving for people coming up to pensionable agethe three hammer-blows that the Chancellor administered to the already brittle glass of longevity and persistent low inflation. Finally

George Foulkes: Will the right hon. Gentleman give way?

Oliver Letwin: No. The right hon. Gentleman is dying to speak and he will have an opportunity to do so.
	The Chancellor has blocked every effort at radical reform of the public services to try to overcome the vast productivity gap there. He destroyed foundation hospitals. He destroyed them so much that he even led to the removal, by his own will, of the then Secretary of State for Health. What does the Chancellor do about this? He tries to deal with the figures rather than the facts. The broad fact is that we have had a 25 per cent. increase in spending on our hospitals in real terms, and only a 5 per cent. increase in the number of treatments or finished consultant episodes. And what happens as a result? The national statistician is called in, and he is asked to redo the productivity figures for the health service; and he calls in Sir Tony Atkinson. What does Sir Tony Atkinson do? He tries to create 10 different measures by which he could prove that the productivity of the national health service has not gone down. And what emerges as a result? On every one of the 10 measures, the productivity of the national health service is shown to have gone down.
	So I return to my original questionwhat is the reality behind the myth? The reality is this. The stability that the Chancellor is so proud of is due exclusively to his allowing other people to determine his fiscal policy in the first two years and his monetary policy throughout. Underneath the stability, he has failed on productivity, failed on competitiveness

George Foulkes: rose[Interruption.]

Mr. Speaker: Order. The right hon. Gentleman has indicated that he is not giving way. The Government Back Benches are far too noisy. [Interruption.] Order.

George Foulkes: rose

Mr. Speaker: Order. This is a debate and I know what debates are like.

Oliver Letwin: I am sure that Labour Members will have their opportunity to be less noisy and more coherent in due course, Mr. Speaker.
	The Chancellor has failedfailed on productivity, failed on competitiveness, failed on growth. Why? Because he has over-regulated and overtaxed. Why? Because he is funding a vast and wasteful bureaucracy which will be the subject of tomorrow's statement and our debate following it, and he has destroyed or all but destroyed the savings culture in this country. The radical reform of public services has been blocked. He has presided not over the economic miracle that is his mythology, but over the gradual erosion of our economic fundamentals.
	It is not just we who have noticed these things. Mr. Scott, to whom I referred at the beginning of my remarks, noticed them. The Prime Minister, whom I have quoted, has noticed them, and that is probably why we now have the bizarre situation of having two Chancellorsthe Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster. It is a sort of mediaeval joust, made even more bizarre by fact that the former Financial Secretary to the Treasury, who once reported to this Chancellor, now reports to the other Chancellor, and this Chancellor has to report to her as Minister for the Cabinet Office The message from No. 10 is clear: time's up, time to head to the Foreign Officenot a moment too soon for the British economy.

Gordon Brown: I will come to all of the shadow Chancellor's claims later in the debate, but is it not remarkable, in a debate about the economy, that he will not concede that we have the lowest inflation for 40 years, that we have the lowest interest rates for 40 years, that we have the highest ever recorded employment in our country's history, and that standards of living have been rising by over 3 per cent. a yearfar higher than under the Major Administration?
	I know that the shadow Chancellor may yearn for the good old days of the early 1990sthe good old days when we had 15 per cent. interest rates, the good old days when, under his economic advice, there were 3 million unemployed, the good old days when there were 1 million people with negative equitybut any comparison between the record of his Government and the record of ours shows us the facts. On inflation, consumer prices are averaging just 1.3 per cent. on the new index, 2.4 per cent. on the old index, contrasted with 6 per cent. average under the Conservative years. And inflation peaked at 21 per cent. under the party that he represents.
	Interest rates have averaged 5.3 per cent. under Labour. They averaged more than 10 per cent. under the Conservative Government. The mortgage ratewhat people have to pay to own their homeshas been 6.1 per cent. under Labour and 11.4 per cent. under the Conservatives. Debt has fallen to just under a third of GDP under Labour. It was 45 per cent. under the Conservatives. We are happy to draw a contrast between the Labour party and the Conservative party: we are the party of sustained growth; they are the party of the two worst recessions since the war.
	The shadow Chancellor has the nerve to give the impression that the good record of the Labour Government exists because we adopted his policies. It is because we refused to adopt his policies that we have a good record. When we froze spending in the first two years of the Labour Government, the last Conservative Chancellor said that he would never have gone through with it.
	As for the independence of the Bank of England, I hope that the shadow Chancellor will have the good grace to apologise to the House because on 11 November 1997 he voted against the Second Reading of the Bill to grant it independence. Not only did he vote against it, but so did the current Leader of the Opposition, who said:
	The new Labour Government is taking action which I believe is going to damage the future of this country.
	That was not a party that wanted to give the impression, either in private or in public, that it supported the major decision on monetary policy that was taken by Labour.
	I am glad that the shadow deregulation Minister has returned to the shadow Cabinet so that it has a more moderate image and looks more centrist, and therefore appeals to the middle ground. As recently as 30 October 2004 he said about the previous Conservative Government:
	15 per cent. interest rates, sky-high mortgage arrears, negative equity, bankruptcies, entrepreneurs giving up the ghost on private-run companies and a lot of people losing their jobs. I don't think there was a family in the country that didn't experience at least one of those anguishes. My parents lost their jobs in the recession. A lot of my neighbours lost their houses.
	That is the indictment of the Conservative party, and that is what would happen if it came back into power. I am happy to give way to the shadow deregulation Minister if he wishes to correct that.

Howard Flight: rose

Gordon Brown: I am happy to give way to the former shadow Chief Secretary. I remind the House that a few months ago he predicted that we were heading for a crisis analogous to the great crash of the 1920s.

Howard Flight: First, I am sorry that the Chancellor misquoted what I said. I said that the effect on the stock market was as bad as in the 1920swhich it is, because it fell 20 per cent. Secondly, did the Chancellor support membership of the exchange rate mechanism, which led to the problems that this country experienced in the early 1990s?

Gordon Brown: Of course we supported membership of the ERM, but we did not choose the rate at which that Government joined it, and on which they could not deliver.
	The shadow Chancellor tells us that this Government have a bad record on tax, regulation and productivity. Let us look at what the shadow Cabinet member responsible for deregulation has been telling the City. At the Techlocate conference in London on 13 October 2004, he agreed that the single most important considerationI hope that the shadow Chancellor is listening, because he may have to adapt his policies as a result of thisis the cost impact of government. He said:
	Businesses are reluctant to locate in places where: tax rates are high . . . Places like Ireland, the USA, Hong Kong, Singapore and the UK attract because their tax rates for business are low.
	So the shadow deregulation Minister does not describe the condition of the British economy as does the shadow Chancellor, who says that our tax rates are unacceptable, and has told an audience outside the House that tax rates are low.
	The shadow deregulation Minister went on to say:
	The second most important consideration is a flexible and willing work force. The third issue is access to market and to supplies. The fourth issue is ease of doing businessdo you feel happy there? . . . The UK's strong academic links around the world are an important part of our network
	in finding jobs. Then he said:
	What are the most attractive locations today?
	The answer to the shadow Chancellor, who got his figures wrong on productivity and who imagines that every regulation damages business, although business often asks for things to be done, is, according to the shadow deregulation Minister:
	The lure of the USA; of China; of India; of the UK.
	I am grateful to him, because he has given us a verdict on the Government that we will be able to use during the election campaign. It answers in substantial detail just about every point made by the shadow Chancellor, who claims that he is responsible for the good things that the Labour Government have done.
	What of the next stage: the Queen's Speech itself, and our policies? The shadow Chancellor did not mention the child benefit Bill. It will enable the Government to extend financial support to trainees who are unwaged and to 19-year-olds completing a course of non-advanced educational training. That will remove the disincentives in financial support for young people to stay on in education while at work. With the growth of education maintenance allowances, it will help many of the 100,000 who do not stay in education and training. I hope that the Opposition will support the Bill, even though the right hon. Gentleman did not mention it.
	That leads me to the difference between us and the Conservatives on the other issue of training, employment and opportunities for the future. Our policy is to expand the new deal so that there is a new deal for skills as well as for jobs. In the pre-Budget report tomorrow I shall announce measures that will enable more of the unemployed and those who are inactive, including incapacity benefit claimants, to get the skills to return to work.
	Our policies have created 200,000 more jobs in the UK since a year ago. Two million more people are in work than in 1997

Howard Flight: In the public sector.

Gordon Brown: The hon. Gentleman uses public sector as a term of abuse. There are 80,000 more nurses and 20,000 more doctors. Surely with its new policies, the Conservative party should welcome that. Does he not also realise that two thirds of the jobs have been created in the private sector, which he should support?
	The unemployment ratethe claimant countin the shadow Chancellor's constituency is 0.7 per cent. He might have been better off congratulating a Labour Government on the jobs that have been created. Unemployment in the shadow Chief Secretary's constituency is 1 per cent.a reduction of 50 per cent. under the Labour Government. Is it not therefore an outrage that when all those things have been happening to get 2 million people into jobs, the Conservative party now wants to abolish the new deal?
	The shadow Chancellor says that the new deal has been an expensive failure, yet 1.2 million people have been helped by it. He said:
	We have got to take painful cuts in the new deal
	which suggests that it might have been doing some good
	to fund David Willetts' pension reforms.
	Abolishing the new deal would cost money because the new deal for single parents, which, as an employment Minister, my right hon. Friend the Secretary of State for Work and Pensions was responsible for developing and is now responsible for taking further, saves 40 million a year by getting people off benefit and into work. Abolishing it is hardly a saving. Will not the shadow Chancellor take into account what the former shadow Chancellor said:
	It's not bad. It's based on programmes that we developed to put young people into jobs?
	Will he not even listen to the Chairman of the Public Accounts Committeea Conservativethe hon. Member for Gainsborough (Mr. Leigh), to whom I shall be happy to give way, because I am going to quote him? He said:
	The programme has been effective in reducing long-term youth unemployment.
	I hope he still agrees with that sentiment, and therefore agrees that to abolish the new deal would be a bad thing.

Edward Leigh: The Chancellor well knows that in attempting to run the Public Accounts Committee I try to rule by consensus, so we take a balanced view. If he is going to quote reports issued by the PAC, he should quote from the entire report. If he read the report, he would realise that we are prepared to see the good parts of the new deal, but we are also prepared to criticise it. We made a point of saying that the evidence was not clear as to how many real jobs the scheme had created.

Gordon Brown: I am grateful to the hon. Gentleman for that, but it is a bad practice for the Chairman of a Committee to disown himself from a report. I was actually quoting what he said to the Lincolnshire Echo. I shall also quote what he said in The Birmingham Post, which shows that the Opposition are prepared to say things outside the House that they are not prepared to say inside it. The nearer they get to their constituencies, the nearer they get to some truth about what is happening. He stated:
	Clearly many young people have been helped by this programme and it has led to a fall in the overall level of long-term youth unemployment.
	If that is not an acceptance on the part of the Chairman of the Public Accounts Committee of the importance of the new deal, I do not know what is.
	Notwithstanding the fact that we are running up to a general election, we had hoped that we would have all-party consensus on the future of the new deal. It is unfortunate that both the Conservative party and the Liberal party, which is disowning the traditions of Lloyd George, who proposed a new deal to conquer unemployment, are opposing the new deal, which has done so much good.

Howard Flight: rose

Gordon Brown: If the former shadow Chief Secretary, who has just left the Front Bench, is the only person who will intervene on behalf of the Conservatives

John Bercow: rose

Gordon Brown: Ahperhaps there is more talent on the Back Benches. I shall take both interventions.

Howard Flight: The Chancellor has just illustrated the fact that the economy is pretty much at full capacity. Given that fact, is he concerned that our fiscal deficit is approaching 40 billion and our external current account deficit this year is likely to be in the order of 40 billion as well? Does he not feel that those imbalances present considerable risks for the future?

Gordon Brown: I am grateful to the hon. Gentleman for sometimes saying things that his Front-Bench colleagues will not say. He claims that the fiscal deficit is 40 billion and suggests that the economy is running beyond capacity[Hon. Members: At capacity.] I am happy to correct myselfit is running at capacity. He must therefore be surprised that inflation is running at 1.2 per cent. Can he explain that?

Howard Flight: I should have thought that the Chancellor understood that in a global economy, excess demand sucks in more imports rather than creates inflation. That has manifestly happened in the United States, whose deficit is relatively far larger than ours. The whole problem is that excess demand causes a massive external deficit.

Gordon Brown: The hon. Gentleman is basically claiming that the United States economy has precisely the same problems as the British economy. The Conservatives say that the European economy is doing badly; now the hon. Gentleman is trying to say that the British and American economies are doing badly. The fact is that we have had seven years of sustained growth, seven years of low inflation and seven years of rising employment. To put the former shadow Chief Secretary's mind at rest, let me quote his remark to The World This Weekend, reported in the Financial Times of 4 February 2003, that
	When you get something analogous to what happened in the later 1920s and early 1930s which, alas, is what is happening today, then the economic and political impact is potentially huge.
	If that is not the former shadow Chief Secretary giving a hostage to fortune, I do not know what is. When the Conservative party was asked about his remarkthe hon. Gentleman was still a Front Bencher when he made itan official replied,
	Bear in mind his City background. He is a City expert giving his analysis.

John Bercow: rose

Howard Flight: rose

Gordon Brown: I shall give way to a different former Front Bencher. It is good to give them a chance to speak.

John Bercow: Millions of voters in this country who have not yet decided whether to vote, and if they do, for which party, are tired of the tedium of the most tribal politics. Therefore, let me say straight away that I concede that the Chancellor was right and we were wrong about independence for the Bank of England; that was one of the best decisions that he has made. Does he, in turn, accept the verdict of a countless number of my constituents and that of my right hon. and hon. Friends that one of the worst decisions and most pernicious judgments that he has made was to tax the British pensions industry in such an underhand way, and to preside over a more than halving of the savings ratio? In that respect, a readiness to apologise and a display of just a modicum of humility on his part would be greatly appreciated.

Gordon Brown: I do not know that the hon. Gentleman is the best person to lecture us about humility

John Bercow: I am on a learning curve.

Gordon Brown: Perhaps the curve will take him over the threshold. The savings ratio is 6.2 per cent. now; it fell to 4.5 per cent. in the late 1980s under a Conservative Government. The savings ratio is only 2 per cent. in the United States of America. The hon. Gentleman should check all his facts carefully before he intervenes, but as he has so few opportunities to speak for the Conservative party these days, I shall give way to him again.

John Bercow: I thank the Chancellor for giving way with his characteristic grace and generosity. Would he care to tell the House what the savings ratio was on 30 April 1997?

Gordon Brown: The savings ratio reflects the cycle; it reflects the point at which the economic cycle is. If the United States' savings ratio is 2 per cent. and ours is 6 per cent., what conclusions does the hon. Gentleman draw? [Hon. Members: Give us the figure.] The figure now is 6.2 per cent. and rising, and it fell to 4.5 per cent. under a Conservative Government. I am sure that the hon. Member for Buckingham (Mr. Bercow) does not want me to repeat to the House what he said about the international development budget just before he resigned from the Conservative Front-Bench team. The Conservatives never want to talk about international development, but let me remind the House that he said that a cut in the overseas development budget was completely unacceptable. I suspect that that is one of the reasons why he is now on the Back Benches. Perhaps the shadow Chancellor should think again about the international development budget.

Angela Eagle: Does my right hon. Friend recall, as I do, that in the heat of battle during the 2001 election campaign, the right hon. Member for West Dorset (Mr. Letwin) was shut away in mysterious circumstances after he revealed rather too much about Conservative plans to cut expenditure? Will he share with the House how those plans have developed, and what he thinks the implications of the immediate 20 billion cut would be?

Gordon Brown: I was going to discuss fiscal policy. As set out in the spending review, total managed expenditure is to rise from 486 billion this year to 576 billion in 200708. In each year we will be able to invest more than   in the last, and meet all our fiscal disciplines. We shall continue to meet those commitments, and all emergencies, while meeting our fiscal rules.
	I wish to express the gratitude of the whole House to the armed forces for their work, especially in the most recent period. The budget for the Ministry of Defence and for our armed forces, on whom the defence of our country depends, is to rise from 29.7 billion to 33.4 billion by 200708. I confirm that we have provided 4.4 billion to meet the extra costs of military conflicts in Afghanistan and Iraq and of meeting international obligations. I am setting aside in the special reserve a further 520 million for this year, raising the overall provision to almost 5 billion. At the same time we shall be vigilant, not only about what we do to help our armed forces, but about security at home.

Crispin Blunt: Will the Chancellor give way?

Gordon Brown: Not at the moment.
	Turning to the international development budget, during our G8 presidency the needs of Africa, development and delivering the Doha development round will be our focus. In the documents of the pre-Budget report issued tomorrow, the Secretary of State for International Development and I will set out our proposals for ensuring through our proposed new international finance facility that Africa and poor countries have the resources they need to fund education, health and anti-poverty programmes, and that the millennium development goals are met. We shall set out proposals for 100 per cent. multilateral debt relief from international institutions, which could complete the process of debt relief for the 37 poorest countries and could be extended to other poor countries as well. In next year's G8 discussions, we shall ask all countries to support our proposed international finance facility. So far 40 countries have done so, and this week Italy announced its support.
	Funds for health are a priority of the new international finance facility to promote treatments and cures for HIV-AIDS, and it is appropriate that this is world AIDS day. To promote treatments, we have allocated in the spending review, in each of the next three years, 450 million, 500 million and 550 million. That is over the three years of the spending period. We will allocate 1.5 billion to tackle this scourge. My right hon. Friend the Secretary of State for International Development and I are today issuing new proposals on the basis of research showing that for every year we bring forward the discovery of an AIDS vaccine, we save 2 million lives that would otherwise be lost. We commit the British Government to push forward the decisions that have been made before to establish a new global AIDS vaccine enterprise and infrastructure for co-ordinating internationally an exchange of research into AIDS.
	As with our offer for malaria vaccines last week, we will also be willing to join other countries to explore how to increase investment in AIDS research and how to develop a jointly agreed advance purchase scheme to make new HIV vaccines accessible to Africa and meet our millennium development targets on health. I hope that I can have all-party support in the House for these proposals that we will put to the G8.

Oliver Letwin: As the Chancellor knows, the international finance facility has cross-party support.
	To return to the point that the right hon. Gentleman was making about Ministry of Defence budgets, and as he was using this opportunity to convey some information to the House, may I ask him for clarification? When he said, if I caught him correctly, that 520 million would be set aside, did he mean that that would be done from the contingency reserve, or was that to be added to total managed expenditure?

Gordon Brown: This is in the reserve. It is the special reserve that we have set up for the Ministry of Defence to deal with the issues of Iraq. I hope that the Conservative party and other parties in the House will welcome that.

Tom Clarke: My right hon. Friend made an appeal for cross-party support on aspects of international development. Does he agree that the standing of the House and of politicians would be greater if all parties endorsed his objective in reaching a target of 0.7 per cent. of GDP, which is universally supported?

Gordon Brown: My right hon. Friend has taken a huge interest in these matters over time. I am grateful to the shadow Chancellor for his support for the international finance facility. I am grateful particularly to Lord Griffiths, on the part of the Conservative party, who has been pushing forward the proposal internationally and working closely with us. I hope that over time all political parties in the House will come to accept that to meet the 0.7 per cent. target, with a timetable for doing so, is the best way forward. In my view, it is certainly the best way forward for Britain as we try to persuade the rest of the world, including all countries of the G7, to support further development aid.
	We hope that during the course of next year, in the year when we are the president of the G8, we will make substantial progress on debt relief, on more funds for health, for the global health fund in particular, and on the IMF. I should add that we hope that by the end of next year we shall have the conclusion of the Doha trade development rounda round specifically in the interests of the poorest countries of the world.

Crispin Blunt: Will the Chancellor give way?

Gordon Brown: No. I want to move forward now. I want to take up the question that was posed by the shadow Chancellor about the fiscal policies of all parties.
	The Liberal party has been making commitment after commitment on spending over the past few months. I believe that I have a duty to remind the Liberal shadow Chancellor, notwithstanding the fact that hardly any of his colleagues are in the Chamber, of the promise that he made on 4 March. He said:
	Our broad vision of public finances is that the overall proportion of national income the Government spends is currently roughly rightand we would not intend to change it significantly in the medium term
	that is, 41 per cent. of GDP at the time that the hon. Gentleman made that proposal. Presumably he would be cutting public expenditure this year.

Vincent Cable: The Chancellor has been reminding the Conservatives of the distinction between a year and a cycle. That is a distinction that we understand.

Gordon Brown: If the hon. Gentleman wants public spending at 41 per cent. of GDP, or wants to give the impression that this is a decision that he is making over the cycle, perhaps he should have said that. That is not what he said and it is not what the leader of the Liberal party said on the same day, which was about the need to
	broadly stabilise the ratio between public spending and the size of the economy.

Vincent Cable: Broadly.

Gordon Brown: Oh, just a few billion here and there. The usual Liberal policy.
	We are owed some precision from the Liberal party on these matters in this debate. If it is going into the election giving the impression that 41 per cent. is the correct figure, it will have to be honest with the electorate that it would be cutting public spending. At the same time, I look at all the proposals that have been put forward by the Liberal partyabolishing tuition fees, introducing maintenance grants, introducing free long-term care, introducing 10,000 more police officers, cutting council tax bills, extending off-peak travel

Vincent Cable: Hear, hear.

Gordon Brown: The hon. Gentleman is saying Hear, hear.
	The list adds up to more than 10 billion. That is money that the hon. Gentleman cannot afford if he would freeze public expenditure. The money that we had last year has risen. As everybody knows, it has been rising this year and it will rise next year and the year after. Only last week, in the Queen's Speech debate, the Liberal environment spokesman, the hon. Member for Lewes (Norman Baker), said that he wanted more funding, and he regretted the fact that the Government had not provided it. He said that the Liberals would allocate Government money for endangered species yet another example of Liberal party expenditure. That is like the Liberal shadow Chancellor.

Vincent Cable: Will the Chancellor give way?

Gordon Brown: I am happy to do so if the hon. Gentleman can clarify the matter. If he is setting public expenditure at 41 per cent. and at the same time he wishes to spend at least 10 billion more, what is the message going out to Liberal candidates? They cannot go round the country saying that they support more spending when they are outside Westminster, when the hon. Gentleman's rule is that spending would have to be cut. This is not a question of Liberal party policy nationally being that there should be more spending, it is a question of cutting the share of public spending in the national income. I hope that I can give the hon. Gentleman the opportunity to clarify that.

Vincent Cable: I am delighted to have the opportunity to do so. The Chancellor is absolutely right that we have a set of spending commitments that amount in total to about 10 billion a year. Half that would be generated by the higher rate of tax. As someone who has argued in favour of social justice over the years, surely the right hon. Gentleman would be in favour of that. That is 50 per cent. tax on earnings over 100,000. The other 5 billion a year comes from cutting other elements of public spending, which undoubtedly include some of the things that the right hon. Gentleman believes in passionately, like the Department of Trade and Industry and the baby bond scheme. However, we would cut them to finance priority spending.

Gordon Brown: That is extremely illuminating. The hon. Gentleman will cut public expenditure by 5 billion. I think that he owes the House and the country an explanation of where these cuts will be made. He is also saying that he will increase public expenditure by 5 billion through a tax change. Yet at the same time he says that the share of public spending in national income will fall. I suggest to the House that his figures do not add up in any way. He is claiming that he will spend less, while in every part of the country the Liberals are committing their party to spend more.
	Then we come to the issue of Gershon. To endorse the principles of the Gershon review, the hon. Gentleman said in his alternative budget that the Liberals
	would bank the long-term savings made as a reduction of the deficit.
	There is 20 billion also. He would use the Gershon savings to cut the deficit. We have already written in these savings in our public spending figures. The hon. Gentleman is promising the country another 20 billion of cuts that he cannot deliver. It is about time Liberal Members went back to their constituencies and thought again.
	I now come to the Conservative party's plans for public expenditure.

Oliver Letwin: Will the Chancellor give way?

Gordon Brown: I will give way when the shadow Chancellor has a chance to confirm what I am about to say.
	The right hon. Gentleman said one Sunday that, over a six-year period, he would provide the ability for us to spend about 35 billion less per year
	in the six years that Gordon Brown's spending plans provide for.
	These are the figures. There are cuts of 6 billion in the first year, 14 billion in the second year, 19 billion in the third year, 24 billion in the fourth year, 29 billion in the fifth year and 35 billion in the sixth year. On top of that, the right hon. Gentleman must find additional money. He has allowed his shadow Cabinet colleagues to get out of control. He has allowed them to promise spending commitments all over the place that he has no way of funding.
	Will the right hon. Gentleman confirm that he has to find money to fund 40,000 extra police officers? He would have to find money to fund 20,000 extra prison places. He wants to link the basic state pension to earnings. He would have to afford that over a period. There would be a tenfold increase in drugs rehabilitation places. Only this week there was a new 200 million spending commitment on schools. There is also a national parenting scheme, 20,000 extra special constables, a 15,000 increase in social housing, 10,000 student bursaries, offshore processing and detention centres. I could go through the whole list of spending commitments.
	When Lady Thatcher was Leader of the Conservative party in the 1970s and was facing the 1979 election, her policy was not to make any spending commitments. However, the shadow Chancellor is not only promising to cut public spending with a headline figure of 35 billion but has to find another 15 billion to pay for the spending commitments that he has allowed his shadow Cabinet colleagues to make. There is a gap between the Conservative party's spending commitments and the real world, and it must find 50 billion of cuts, which cannot be achieved by savings on paper clips in the civil and public services.
	The right hon. Gentleman tells us that those cuts can be achieved by efficiency savings throughout the civil service, but that 50 billion is not the only sum that he has to findhe must also account for the 20 billion of Gershon savings. If a Conservative Administration were in power tomorrow, they would be looking for a total of 70 billion of efficiency savings. That is the state of play for the Conservative party. I am happy, if he wishes, to allow him to correct the figure of 50 billion of efficiency savings plus the Gershon savings that would have to be accounted for if he were in government tomorrow.

Oliver Letwin: I thank the Chancellor for allowing me to intervene at last.
	I shall not respond to any of that garbage, as I would be surprised if the Chancellor could really delude himself that any rational being would listen to such stuff. I shall do something else, and defend the Liberal Democrats. [Hon. Members: Oh!] If Government Members will contain themselves, the Liberal Democrats are my principal opponents in my constituency, and I do not believe that British politics benefits from the kind of rubbish of which the Chancellor was accusing them. The hon. Member for Twickenham (Dr. Cable) is a perfectly rational individual and made a perfectly rational proposition with which, however, I disagree. It is rational to disagree that we should have public spending broadly at its present level across the cycle. The Chancellor knows perfectly well that the Noddy arithmetic that he was using for the Liberal Democrat proposals is no better than the Noddy arithmetic that he was using for our proposals, and it is no way to conduct British politics.

Gordon Brown: If the shadow Chancellor had said that my figures were wrong and could prove that they were, I might have had some respect for what he has just said. However, he said on Breakfast with Frost on Sunday that he would find 35 billion of savings. Does he deny that? Of course, he does not. [Interruption.] He says that it is beneath contempt to point out exactly what he said on Breakfast with Frost on Sunday. However, he said that he wanted 35 billion of savings. He must also find another 15 billion, because other Conservative Front Benchers have made commitments worth 15 billion. If he is going to find that sum, as he keeps telling us on the radio and elsewhere, through efficiency savings, he must deal with a point made by Sir Peter Gershon, who said:
	It is important that the drive for efficiency should not put at risk the delivery of public services, and a target in excess of 2.5 per cent. is likely to present such a risk.
	Let me tell the House what savings of 50 billion would mean. If the right hon. Gentleman froze civil service recruitment, as he plans to do, he would gain 250 million a year. In other words, he would get 0.5 per cent. of the savings that he claims that he needs. If he halved the civil service by sacking half its members tomorrow and getting rid of prison officers, probation officers, security officers, customs officers and people guarding our ports and coastguards, he would save less than 6 billion of the 50 billion that he needs to save. If he sacked every civil servant in the landdismissed the whole domestic civil servicehe would get only about 10 billion or 12 billion, so he would still be 38 billion short of the target that he is trying to reach.
	The fact of the mater is that the shadow Chancellor is going round every television and radio studio saying that he will make 35 billion of cuts and that there are 15 billion of commitments by his shadow Cabinet colleagues. He says that he will find that sum without affecting the quality of services such as health and education by cutting bureaucracy and waste. However, if he sacked every civil servant in the country, including prison officers and probation officers, he would only find 10 billion of the 50 billion, which exposes the hollowness of the Conservative campaign.
	Why does the right hon. Gentleman not tell the country the truth, and admit that he wants to cut services, not just bureaucracy? Why is he not honest and say that he has always believed in cutting the national health service, charging and privatisation? Why does he not say that privatisation, rather than the development of public services, is the goal of Conservative shadow Ministers? Why does he not tell the truth and say that he has always wanted to cut public expenditure to 35 per cent. of national income, which he said consistently until he became shadow Chancellor? Why does he not admit that that is the view of the Leader of the Opposition, who has also committed himself to massive cuts? Why do they not admit that what they really want to do is cut the number of teachers, nurses, doctors, home helps and carers? The issues that we should consider in our debate on the Queen's Speech are, first, stability under Labour against a party that cannot even be honest about its monetary policy, and, secondly, investment under the Labour Government against massive cuts under the Conservatives. I believe that, when we come to the general election, the country will deliver its verdict by supporting us.

Vincent Cable: We support the practical measures on the Inland Revenue and Customs and Excise in the Queen's Speech. I am glad that the Government have noted the concerns that I have long expressed about consumer debt, which is to be dealt with in limited but useful legislation that we will support. I also support the sensible suggestion of the right hon. Member for West Dorset (Mr. Letwin) about introducing legislation on the independence of the statistical service. A key theme over the next few days will be the integrity of Government figures, so such legislation would be a useful building block.
	It was clear from his speech that the Chancellor has not listened to the advice from the Chancellor of the Duchy of Lancaster and our man in Brussels to stop boasting about the Government's economic record. However, I am rather on the side of the Chancellor of the Exchequer, because the Government have very little to boast about, and almost all that there is of positive note is on the economic side, so his points about economic stability were fair, as I have always acknowledged.
	As for basic economic growth over the past seven years, the British economy has averaged about 2.8 per cent. a year, a little above the average for the Organisation for Economic Co-operation and Development. Some European countries such as Sweden and Spain are doing better, as is the United States, but we have a perfectly commendable growth rate whichthere is no point denying the underlying factsis the product of a combination of fortunate external circumstances and a favourable international economic environment. The Chancellor has also enjoyed a helpful inheritance, including liberalised labour and financial markets, which have contributed to low inflation. Another helpful factor is sensible economic managementnotably monetary policy, the independence of which, we all now accept, was a good move.
	The Chancellor began by focusing on fiscal policy, and I am happy to respond to the challenge that he threw down. He obviously finds it psychologically difficult to adjust to an environment in which the Liberal Democrats are more disciplined about public spending than he is, but we shall continue to argue the case for making tough choices in public spending. The Chancellor asked me to account for our spending proposals, but it would be useful if he could elaborate on the progress of the Gershon savings exercise. How will he report on that progress? It has never been clear how we would know whether the Gershon savings had been realised and there are some opaque memorandums flying around Whitehall on implementing the recommendations. Will the Chancellor therefore undertake to set out concretely how much money is being saved under the Gershon programme year by year? What progress, for example, is he making in reducing the number of procurement agencies? We need to evaluate those concrete steps to be sure that the Government are serious about making savings. Whatever their motivation, we need a proper monitoring mechanism.
	On fiscal policy, the Chancellor will have to acknowledge over the next few days that there is a growing consensus that he has a problem in meeting his fiscal objectives. It is not a political point. The International Monetary Fund, the OECD, the Institute for Fiscal Studies and the National Institute of Economic and Social Research are not politically driven bodies, but they are all arguing that he faces that problem. It may not be a big problem quantitatively7 billion, 8 billion or 10 billion is a very large sum to most individuals, but in terms of the economy it is not a very large sum. That is the standard consensus projection of the extent to which the Chancellor will be adrift in respect of his fiscal policy objectives.
	My concern is not the sum of money. Economically, it is not large and could easily be absorbed in the Government's overall borrowing requirements, since the debt position is comfortable. The issue is credibilityfundamental economic credibility. If the Government set tests, they should be able to meet them. The Government clearly understood from the outset that economic credibility was important. Indeed, this year the Nobel prize went to a couple of economists who spoke about the importance of economic credibility. Credibility was what lay behind the decision to establish the Monetary Policy Committee, and it has enhanced the credibility of interest rate setting enormously.
	There is a problem, however, with the way the Government have approached fiscal policy. They set fiscal rules, which are broadly sensible, and more or less followed them, but there is a question about who decides whether those fiscal rules have been met. Will that be determined independently or by the Government? The golden rule is a highly technical area. Even for anoraks, it is a recondite subject. There are a couple of specific issues. First, who evaluates the assumptions that the Government make in their forward projections? At present, the Government invite the National Audit Office, on a restricted basis, to examine those assumptions and pass judgment on them. That is sensible, but the NAO does not have unrestricted access to evaluate the Government's assumptions, and it should.
	The second aspect that is defective is who decides what the golden rule is and whether it has been met. That is a technical point but it is extremely important. Who decides when the cycle started and when it ends? That is a difficult question. In my private sector days, I was once set the problem by my company. If the company had known the answer, it would have saved a lot of money in investing in refineries and chemical plants.
	Somebody must answer the question, and it should not be the Chancellor, but a genuinely independent body. That is why we argue that the National Audit Office should have an enhanced roleeconomically and technically, it has competent staffto evaluate the full range of fiscal policy and give an independent judgment on which the Government can then base a credible fiscal policy. There is no party political advantage in arguing for such a structure. It would be in the Government's interest to have a fully credible fiscal policy, which they do not have at present.

Angela Eagle: As a former member of the Public Accounts Committee, I know that the NAO has to borrow civil servants to do its calculations. It would probably have to borrow civil servants from the Treasury to fulfil the role that the hon. Gentleman is setting out for it. Is he saying that there are civil servants in the Treasury who have been falsifying the figures, or that the credibility problem, as he calls it, is that people do not believe the figures because they come from the Treasury? What difference would it make to transfer people who currently do that work in the Treasury to do it at the NAO?

Vincent Cable: Nobody is suggesting that anybody is falsifying figures, but if the hon. Lady sat on the Public Accounts Committee, surely she understands the difference between a Government Department and a body that is directly accountable to Parliament. That is the fundamental distinction that gives the NAO credibility.

Oliver Letwin: I agree with the hon. Gentleman about this, as about the statistics. In a few weeks, we shall publish proposals and, I am glad to say, we shall probably have cross-party agreement. If we could just get the third party, Labour, to agree, we could have a credible system of fiscal discipline for the foreseeable future.

Vincent Cable: That was a helpful intervention and I shall bank it for future reference.
	On the wider question of economic policy, we have discussed the rate of economic growth, which is respectable. It would help, though, if instead of looking back, we looked forward. Any honest assessment of the future must be based on the fact that the Government will face economic challenges that will make economic management much more difficult. Some of them are external and the Government have little control over them. It is still possible that we could be hit by a major oil shock. The Saudi Oil Minister was in London yesterday arguing that something of the order of $15 a barrel is still being paid, on account of the political risk arising from the war and enhanced terrorism risk in the middle east. The oil price could get a good deal worse, but it is not a factor that the Government can control.
	A second challenge that is looming is the problem presented by the collapsing dollar. I could make the point that sterling is now higher than at any time since the days of black Monday, but it is not a domestic issue. It relates to the United States. The American currency is collapsing, at least in part because of fiscal irresponsibility caused by a tax-cutting agenda on which, I fear, we differ substantially from the Conservatives. It has had disastrous consequences in the US and it will have a major impact on this country.
	We also have a home-grown problem, which is the problem associated with personal debt, and the linked problem of boom and bust in the housing market. Some revealing figures on personal debt were produced in the past couple of days. People who retire are facing mortgage repayments into retirement40 per cent. of all mortgage holders face repayments into their retirement, which is twice the level 10 years ago. People are literally paying till they drop because of their mortgage liabilities.
	On the position in the housing market, I have no viewsit is not sensible for politicians to have a view on whether it is good for house prices to rise or fall. What is serious is that we have a boom-and-bust environment. Within the past few weeks, we have seen growing evidence of a very substantial collapse in lending and in equity withdrawal, which almost certainly, according to analysis by the Bank of England, will have major economic consequences. I do not raise the matter simply as a problem. It would be helpful if the Government thought through some of the steps that they could take to alleviate the problem. I shall make a few suggestions.

Nigel Beard: The Bank of England gave evidence to the Treasury Committee yesterday and did not concur in any way with the predictions that the hon. Gentleman is making. It gave no indication that it believed that boom and bust was about to occur.

Vincent Cable: The Bank of England quarterly bulletin is full of articles describing the difficulties in detail. Why has the Bank of England taken on the job of setting interest rates in relation to the housing market? As the Governor has made abundantly clear, he is alarmed at the possibilities that will arise. There are certain things that the Government could sensibly do to alleviate the problem.
	The first is to ensure that we have a price index that reflects the housing market. At present we do not. I understand that the Treasury is working with EUROSTAT to establish a new index that will fully incorporate the price of housing. It would be helpful if the Government would say whether they intend to adopt it and when. That would enable the Bank of England to take house prices much more explicitly and clearly into account.
	Another problem relates to credit insurance. One way of stopping hundreds of thousands of people facing the disasters that people experienced in the early 1990s would be to ensure that their mortgage payments and credit payments were insured. If the Chancellor had studied the problem and thought about it, he would know that the mortgage insurance market in this country is unsatisfactory. It is expensive and defective. I hope that he can take some initiative to ensure that the competition authorities look at it.

Jon Owen Jones: Can the hon. Gentleman explain how his party's policies on removing the UK's only property tax and increasing the tax rate on those who are generally paying for houses would help to bring about a more sensible housing market?

Vincent Cable: Analysis shows that it would make little difference. We would do that to introduce a much fairer tax system in which local taxation is related to people's ability to pay. One-off effects may occur as a result of removing a property tax, but in the long run it should make no difference to the problem that I am describing.
	Long-term growth and the factors that drive it is the third issue that I want to raise. I sympathise with the views expressed by the Conservative spokesman about the Government's remarkable optimism that their intervention in promoting innovation and growth will produce consequences. One of the reasons I am sceptical about pouring large amounts of money into the Department of Trade and Industry, which does some useful things, is my extreme scepticism about the extent to which that can drive economic growth.
	Scientific research is clearly a Government responsibility: the market will never do it, but it is clearly a public good. That is why I am in favour of, among other things, bee research, which the Chancellor and the Prime Minister found so surprising and amusing. Research is clearly desirable and the Government should fund it. It is, however, another thing to argue that private companies, many of which would invest anyway, should be subsidised to do so, when they can raise money in venture capital markets and from charitable bodies such as the Wellcome Trust. The market enables growing companies to function without large-scale funding from the DTI, and I am sceptical about the role that the Government are playing in driving economic growth.
	The other area of scepticism relates to the complexity of Government regulation. The Chancellor has a view, with which I happen to disagree, that somehow or other the Government can fundamentally change how business behaves and operates. The classic example of that is the belief that the Government have invested in research and development tax credits. R and D tax credits are a superficially attractive ideaR and D is a good thing. Let's give them a big tax credit to support it.
	All the research done in the past two years shows that R and D tax credits have made no difference to the level of research and development, because most private companies were doing it anyway and the policy has a large associated dead-weight cost. I am not suggesting that we should simply stop that tax credit, but we must evaluate its consequences. The belief that tweaking the tax system and adding great complexity somehow or other changes business behaviour and increases investment, innovation and growth is fundamentally flawed.

Sally Keeble: Is the hon. Gentleman saying that he would keep the tax credit, despite the fact that he thinks that it does not work, or is he saying that he would get rid of it? Will he get on to other Liberal Democrat tax and spending plans, because some hon. Members are interested in hearing them?

Vincent Cable: As I have said, any sensible Government of any party would evaluate the effects of policy before rushing in to change them. The research and development tax credit is a good examplewe need to be guided by experience. If it works, we would judge it more sympathetically.

Mark Prisk: The hon. Gentleman is making a good point about the dangers of tinkering and meddling with the tax system, which the Chancellor is guilty of. Will he take one step further? Does he agree that tinkering and meddling not only fails to achieve end results, but distorts business behaviour, often in an unproductive way?

Vincent Cable: Yes. The hon. Gentleman is right. This morning, the Financial Times published a letter supplied by the Treasury, which makes the opposite point from the one that it was intended to make. It was published to highlight the horrors of tax avoidance and the iniquity of tax avoidance lawyers and states:
	As the government regularly changes the rules of the tax game, you need to be very vigilant. You have to check continuously to see you're still getting the best from your company.
	That underlines the point that, if tax policy constantly changes, business behaviour is affected in order simply to skim the tax system.

Martin O'Neill: The hon. Gentleman has sought to disparage the R and D tax credit and has assumed that companies that receive it would have invested anyway and remained in Britain. However, the market in a number of areas is international, both for business and for tax and rewards. A number of companies have invested considerable sums in Canada, where Liberal Governments have provided the kind of R and D tax assistance that the hon. Gentleman disparages in the United Kingdom.

Vincent Cable: I was not disparaging the R and D tax credit; I am sceptical and await the evidence, which so far suggests that the share of R and D in GDP has been completely and totally unaffected by that generous tax credit. However, we shall wait to see the outcome.

John McFall: The Treasury Committee took evidence from AstraZeneca, Rolls-Royce and Microsoft, the representatives of which said that the R and D tax credit is one of the best initiatives.

Vincent Cable: If I were representing a company in front of the Treasury Committee, that is exactly what I would say. Why look a gift horse in the mouth? We have made the point that a good deal more clarity is needed about the benefits that derive from complex tax breaks, as opposed to a much simpler policy of moderate rates of business taxation.
	My final point is rather different and relates to an issue, inequality, on which I probably share much more common ground with the Chancellor than do the Conservatives. One thing that has emerged from the statistics, which are somewhat unsatisfactory, is that, despite the Chancellor's undoubted commitment to that issue, income and wealth inequality in the UK are not very differentin some respects, they are even worsethan they were in the days of Mrs. Thatcher. There are several reasons why, some of which involve the workings of global markets, and some of which involve the workings of the tax system.
	If we have a tax system in which the top 20 per cent. pay a lower percentage of their income than the bottom 20 per cent. of the population, it is clearly not working to alleviate the problems of inequality. A few months ago, a Labour Back Bencher tried to defend the highly regressive system of council tax. One of our criticisms of the possibly well-intentioned measures that the Chancellor has introduced on tax credits is that tax credits perversely aggravate the problem.

Sally Keeble: If the hon. Gentleman is in favour of increasing equality, why does his party oppose the new deal for lone parents, the pension credit and the child trust fund, which are three of the measures that do the most to help women and provide them with equality in modern Britain?

Vincent Cable: We have suggested that a better way in which to deal with the position of older pensioners would be to give them a decent, basic old age pension rather than a pension credit. One of the reasons for that, which we have debated extensively, is the fact that large numbers of pensioners do not claim pension credit. More seriously, those pensioners who claim face a very high marginal rate of tax40 per cent. of them pay more than half their marginal income in tax as a result of benefit withdrawal. The system is so pernicious because it is a massive disincentive to save. It does not solve the problem of inequality.
	In conclusion, the Chancellor has let it be known in the press over the past few days that he wants to present himself, his Government and his Budget with a flavour of Britishness. Economic policy will gain a patriotic element, which I appreciate because we all like to feel that we are patriotic rather than nationalistic. Under this Government, however, we have finished up with American levels of inequality, French levels of centralisation and, if the Home Secretary has his way, we will get Chinese levels of civil liberties.

Mr. Deputy Speaker: Before I call the next speaker, I remind the House that Mr. Speaker has placed a 15-minute limit on all speeches by Back Benchers and that it applies from now on.

John McFall: I congratulate the shadow Chancellor below the Gangway, the hon. Member for Twickenham (Dr. Cable), on a thoughtful speech. However, his political education would prosper if he read the minutes of the Treasury Committee on both the DTIthe regional development agencies say that it would be a disaster for them if it were taken awayand the R and D tax credit, which, as my hon. Friend the Member for Ochil (Mr. O'Neill) said, is essential to attract large multinational companies in an international competitive environment.
	This debate is an important opportunity to assess the state of the economy and the public finances, which the Treasury Committee will do over the next few weeks when the Chancellor gives his pre-Budget report and appears before the Committee.
	The Committee is interested in two areas: first, the state of the economy and the prospects for growth; and, secondly, the state of the public finances. As we mentioned in our report last year on the autumn PBR, the IMF has stated that the UK's economic performance is enviable, but there are fresh challenges in relation to growth. As we know, the Monetary Policy Committee has raised interest rates on a number of occasions to the record rate of 4.75 per cent. Some would say that the housing market has gone off the boil, which would have implications for the economy. The risks to the UK economy are largely international, with oil prices at $50 a barrel or so, the implications of the USA's current account deficit for the global economy and the sluggish growth in European countries.
	One of the issues that the Treasury Committee will consider with the Chancellor is how to improve productivity. That has been a centrepiece of the Treasury's aspirations, and it is a challenge to all European economies. When the Chancellor comes before us on 24 February to discuss regional productivity, we will refer to developing countries, the rate of progress of China and India, and how we rise to the challenge of ensuring that regional inequalities in this country are lessened.

Anne Picking: On developing countries and how we try to marry up social justice and economic stability, is my right hon. Friend aware of the early-day motion in aid of Band Aid 20, in which we support the Band Aid single? The Chancellor has allowed the VAT on that single to be donated to the charity. Woolworths is donating all its proceeds from the single to the charity, and Asda phoned me this afternoon to say that it will do likewise.

John McFall: I signed that EDM, and that is very welcome news. I have an Asda store in my local community, so first thing on Saturday morning I will be in there buying a Band Aid single. I congratulate Woolworths and Asda and ask other retailers to follow their example.
	There are several sobering statistics for us as regards developing countries. Within 20 years, half the world's manufacturing exports could come from those countries. Already, China is exporting more than France, Italy and the United Kingdom. Indeed, Asia is exporting as much as the European area. We can learn a lot from what is happening in those countries in terms of the need for us to develop our skills in the knowledge economy. We pride ourselves on the information technology graduates who come out of our universities, but India and China are producing 125,000 computer science graduates compared with 5,000 in the UK. The question for us is how to embrace that change and get involved in it.
	Currently, only 1 per cent. of UK exports go to India and China; we need to increase that proportion. In January, the Government are promoting the year of science in ChinaLord Sainsbury is going out thereand in December there is a UK financial dialogue taking place with China. I welcome those steps. However, we need progressive policies on science and skills. As a chemistry graduate, I am very sad that Essex university is closing its chemistry department[Hon. Members: Exeter.] I meant Exeter university. At a time when the number of science, technology and engineering university applications is falling, we need to do more to encourage those subjects.

Robert Key: Does the right hon. Gentleman share our worry that unincorporated firms are specifically excluded from R and D support? That restraint is a particular concern for unincorporated enterprises that operate in universities. Has his Committee considered that, and if so what were its conclusions?

John McFall: We took evidence from several vice-principals for a regional productivity report, and they made that point. We will examine that with the Chancellor when he comes before us, as it is a live issue.

Mark Prisk: Is the right hon. Gentleman aware that this morning the Select Committee on Science and Technology took evidence from the Minister for Science and Innovation, Lord Sainsbury, and was told of a letter sent from the Secretary of State for Education and Skills, with whom they are trying to work? It is a serious matter that chemistry departments are being closed, not only in Exeter but across the country. The Government cannot have it both ways, because that is against the interests not only of academic research but of the long-term sustainability of British industry and competitiveness.

John McFall: I entirely agree with the hon. Gentleman. That is an important issue for the Chancellor, and we need a whole-Government response to it. The number of applicants is going down, and we have to tackle that if we want to challenge India and China and to work alongside them.
	I want to say a few words about Europe. A couple of weeks ago, I attended the EU's budget committee for member states. Several issues arose, including that of the European budget itself. I asked what the EU's policy priorities were for 2005, making the point that good budgetary practice calls for reprioritisation when new needs arise and wondering whether certain of our activities should be reduced to make way for new ones. I did not receive very satisfactory responses. We know that the EU auditors have not signed off the books, so it is very important for the UK Government to look at the EU budget to ensure that it is spent wisely on the right things.
	The EU needs to take action externally in two areas. First, despite the possibility of an accord in the Northern Ireland peace process very soon, it is still important that we contribute to the Peace 2 programme for peace and reconciliation in Northern Ireland. That requires 60 million, but the EU appears not to be providing that finance in its main budget. I ask Ministers to press the EU on that.
	Secondly, whatever position we may take on Iraq, we must ensure that the finances are there to ensure, ultimately, a peaceful settlement. At the moment, the EU does not agree to the use of the flexibility instrument, which would allow 200 million of spending in Iraq. It is insisting that 190 million of required resources will have to be met through the use of the flexibility instrument. A lot of pressure needs to be put on the EU on that point, and I ask Ministers to take it up.
	Several Members mentioned savings. The official Opposition, in particular, referred pejoratively to means-testing. Means-testing takes place daily through the Inland Revenue, which taxes every one of us according to our income. The question is whether pensioners are in need of extra money. The figures for Scotland show that 327,000 individualsor 270,000 householdsare in receipt of pension credit. The poorest third of Scottish pensioners are on average almost 1,900 a year better off. That is a good deal for our communities and for our local pensioners. I commend the Government for that initiative.

John Bercow: Will the right hon. Gentleman give way?

John McFall: I believe that this will be taken off the time that I have, Mr. Deputy Speaker, but I give way.

John Bercow: I thank the right hon. Gentleman for his characteristic generosity. In the light of his comments about means-tested benefits, and in view of his consistent and stoical support for his right hon. Friend the Chancellor, would he care to explain why the Chancellor told the Labour party conference that it was a key aspiration of his to bring about the day when the means test for our elderly people was abolished?

John McFall: I think there is a case for that, but given our inheritance in 1997there were too many poor pensionersthe short and medium-term objective is to ensure that they have a decent level of income. Once they have that, we can move on to consider how we provide in the longer term. I am glad that I gave way to the hon. Gentleman on that point.
	There are 3.17 million people in Great Britain who receive pension credit. That is a great testimony to the Government and their initiative since 1997. I also note that the Government will spend an extra 10 billion on pensioners in 200405; 7 billion more than an earnings link would have provided. Some parties offer an earnings link for four, eight or six years, certainly not for eternity. The Government are right about the issue.
	Adair Turner and his colleagues on the Pensions Commission have been examining whether it is worth saving for pensions. They found that the pension credit, through the savings credit, rewards pensioners aged 65 and over who have made modest provision throughout their lives. It is worth 14.70 a week to individuals and 19.20 to couples. That is a welcome development. Are there pensioners who may lose out? Yes. Is it worth while saving in today's environment? That is manifestly the case. The Turner commission and others made that point.
	Withdrawal rates were mentioned earlier. Before 1997, pensioners faced a withdrawal rate of 100 per cent., with savings being matched to benefits, pound by pound. The new savings credit rewards people for saving and that is a progressive policy.
	Three issues dominate the subject of financial services, to which the Treasury Committee has given a great deal of consideration in the past. First, a healthy financial services industry is crucial to the country. It is a 2 trillion industry, a major employer, a major provider of capital to United Kingdom companies and a major repository of savings for nearly every family in the country. Policy makers cannot allow the industry to fade away as several great United Kingdom industries faded away in the past.
	Secondly, rightly or wrongly, there is a loss of trust in the industry, and customers have departed. Ron Sandler said in his testimony to the Treasury Committee that local supermarkets are now trusted more than major insurance institutions. We need to correct that.
	Thirdly, major parts of the financial services industry have abandoned everyday, average Britain. In many ways, it is a middle-class pastime. We have not reached those people on lower incomes and poorer people to get them to save. The industry must take that on board. The other side of the industrythe credit card providersis inundating us with promotions for cards, but that does not apply to the asset gatherers. They have complex products and expensive distribution channels. That needs to change.
	I have held discussions with the industry in the past few weeks. Along with the industry, consumers, the Association of British Insurers, the Investment Managers Association and others, we hope to establish a forum for the industry and consumers to come together to examine issues that affect financial services and consider the future so that we can rebuild a healthy industry. That is one of the reasons why I welcome the consumer credit Bill. The Treasury Committee has been banging on about it for many months.
	The need to tackle unfair credit agreements, for more regulation, to excise the crooks from the market, for a fairer regime for business and, overall, as the shadow Chancellor said, for a clearer and transparent market, is important. We need to implement the Bill before May 2005. That is an arbitrary date but it is important that the measure is implemented before then. I do not want us to resile from that commitment. I therefore ask Treasury Ministers and others to respond to that specific point.
	I agree 100 per cent. with the Chancellor about better public services. However, my right hon. Friend knows that civil servants, especially lower paid civil servants, are concerned about the number of redundancies that have been announced. The Chancellor appeared before the Treasury Committee in July and I note that the Public and Commercial Services Union welcomed his statement in July. However, it makes the point that there should be an agreement between the Government, the unions and other civil service organisations about the steps that Departments should take to avoid compulsory redundancies. Time should be allowed for civil service-wide machinery to be put in place. It is incumbent on the Government to do that, given that most of the individuals who could be made redundant are the lower paid.
	The policies that were announced in the Queen's Speech and today's debate ensure that we will rise to the long-term challenges that face the country. How do we implement the Lisbon agenda? How do we make Europe a more competitive environment? How do we continue to ensure UK economic growth and more employment in our communities? How do we ensure safer communities for our constituents and their families? If we can achieve those aims, we will have a better Britain and a more contented country. I wish the Government well in that but warn them that the Treasury Committee will examine the detail of the pre-Budget report to ensure that the Chancellor and his colleagues live up to their promises.

Howard Flight: Tomorrow, one way or the other, I believe that we shall hear the Chancellor's last pre-Budget statement. Today, we have heard the Chancellor being, a little unwisely, as complacent and boastful as ever. If he, like me, had got on his bike in the past few weeks and visited the financial community, on which so much of our earnings for our imports depend, he would have found it increasingly concerned about the deterioration in our public finances.
	If I may put it simply, our economy is close to full capacity. The norms of Government borrowing are: borrow when an economy is well below capacity to keep it afloat, but that it is sensible when an economy is at full capacity to be in balance or even in surplus. However, our borrowings this year approach 40 billion. We have an external current account deficit that is likely to be around 40 billion. That is not a balanced, well positioned economy. It is irrelevant whether the Chancellor fudges the figures to fulfil the golden rule because the position is the wrong way round. The golden rule makes sense over a cycle if one borrows when there is slack in the economy and moves into surplus when it is at full capacity. Doing it the other way round leaves matters positioned wrongly for the future.
	Estimates of the black hole that would have to be filled by additional taxation if the Government were re-elected vary between 11 billion and 20 billion. The latest City estimates have continued to increase. Again, on the golden rule and the true underlying position, it is disappointing that the Chancellor had to resort to cooking the depreciation figures to squeeze another few billion pounds in his favour. As we all know, instead of treating the cumulative deficit on a numbers basisadding the pluses and minusesthe Chancellor resorted to a bogus method of average in relation to gross national product, giving a figure that is not the actual monetary cumulative deficit over the cycle.
	My right hon. Friend the Member for West Dorset (Mr. Letwin) went through the wider issues that make it clear that the economy is no longer as well placed as it has been. We have dropped from fourth to eleventh in the world's competitiveness league. We have underperformed when compared with the other English-speaking economies, especially Ireland. Our productivity growth is a third down on what it was under the Conservative Government and below the EU average, when the Chancellor is perhaps among the most critical of EU economic performance.
	The savings ratio is down not only because of the cycle; it has been down by a third on average in the past six or seven years. That presents considerable problems for pension accumulation and investment.
	We still have a stock market, although the Government have done their best to wreck it. They appear to believe that long-term investment can be financed by cashing bonds. A sad disappointment may be encountered. This country's stock market has underperformed by 35 per cent. when compared with the United States and France. It has even underperformed by 10 per cent. when compared with Germany. I do not claim that the stock market constitutes a full measure of the position of an economy but it is ignored at peril. There are serious imbalances in the economy.

Paul Farrelly: Have the hon. Gentleman's City friends ventured an opinion on how the shadow Chancellor's figures stack up? He proposes tax cuts on top of spending cuts.

Howard Flight: I am pleased to tell the hon. Gentleman that they understand perfectly well what we are saying and that they are surprised that neither the Chancellor nor Labour Members seem to understand. I shall summarise it very simply; perhaps the hon. Gentleman will be able to understand. We have set out our spending strategy, which, instead of the Government spending 42 per cent. of gross domestic product, will result in us getting the figure down to 40 per cent. over the period to 2008. The amounts have been set out bit by bit.
	I and various colleagues set up the taxpayer value review in which 60 people under David James have considered each area of Government. It is not quite complete, but there will be savings significantly in excess of the Gershon savings. Now, let us take those two together. We have made it clear that in some areas additional spending will be neededfor example, in defence, and for our policies of choice in health and educationbut the resulting overall position will clearly permit some scope to reduce taxation by a significant amount over the next period of government.

Martin O'Neill: I appreciate that the James study has not been completed, but there must obviously be some overlap between Gershon and James. Can the hon. Gentleman give us any indication of its extent, because surely any additional money over and above James is all the Conservatives would have to offer as a tax cut?

Howard Flight: Again, I am grateful for the intervention. First, there is the question of how much of both is cash for real and how much accounting entries. The hon. Gentleman will no doubt be aware that roughly half of Gershon is accounting entries, not for real. If he reads our announcements, he will see that we have got up to a figure of, if I recollect correctly, approximately 24 billion and covered about 70 per cent. of the territory. He can make his own estimates as to where we will get to in the fullness of time.
	The second task is to consider how much of our work is cashable and how much is not. The answer is that the proportion that is truly cashable is substantially higher than Gershon. The James review has covered all the territories that Gershon has covered. There are a lot of territories that Gershon has not covered; I cannot understand why the Chancellor did not give the review a full brief to consider all areas. On the figures that are available to date and in respect of what I have just said, I trust the Chancellor understands that, in cashable terms, quite a significant margin will come through in excess of Gershon.

James Plaskitt: As the hon. Gentleman is referring to the James report, can he confirm that its proposals are official Conservative party policy?

Howard Flight: I thank the hon. Gentleman, but I think that is rather a strange question. The Conservative party has made it quite clear that the David James team is an independent body that is considering the whole public sector and will report back to the Conservative party, which will make its policies very clear when our election manifesto is set out. That is perfectly clear and straightforward.
	The reality is that the Chancellor has presided over a rising tide of personal debt, but he has kept the figures looking good and created hundreds of thousands of public sector jobs, although only 100,000 of the total of 600,000 mean, as he has just said, more people in the front linemore doctors, more nurses and so forth.
	What lies behind what has happened is the tale of the two Chancellors; I am sure Labour Members have read it. William Keegan wrote a superb book entitled The Prudence of Mr. Gordon Brown, which I was asked to review earlier this year. Indeed, he set it out very clearly that the Chancellor, in his first three years in office, was deliberately prudent to seek to win the longer-term confidence of middle England and the financial community. Then, he embarked on a massive public spending splurge from 2000 onwards.
	It is worth focusing on the macro figures and on the Office for National Statistics figures in relation to that public sector spending. By the end of this tax year, spending and taxation in cash terms will be up by about 60 per cent. Where has all that spending gone? Every citizen knows that they do not see improved delivery of anything like 60 per cent.[Interruption.] If Labour Members would care to pause for thought, they would realise that the ONS figures show that approximately 80 per cent. of all that spending has been consumed by public sector inflation as the ONS defines it.
	What is public sector inflation? It is a mixture of several things. It is basically higher pay for those working in the public sector and more peopleanother 600,000. When I was a student economist, I asked my teacher why people earned less in the public sector than in the private. He said that they had greater security of employment and better pensions. That seemed a fair balance to me, but the ONS now shows that, level by level, pay in the public sector is 20 per cent. higher than it is in the private sector. Indeed, many of my friends who work in the health service have made the point to me that the money is not getting through for additional facilities, but has come through in significant pay increases.
	Again, we should consider the macro data. In 1997, public sector inflation was 1.6 per cent. It is now running at 10 per cent. We should consider the productivity data. The Government try to hide the figures, but productivity in the public sector has declined by 10 per cent. This is the overall story of failure to reform the public sector, failure to deliver, excessive regulation, excessive bureaucracy and more and more costs between money at the centre and getting it down to the delivery units.
	As William Keegan's book points out, this was the Chancellor's great fear: that people would say, You've spent all the money, but the delivery is not there. You've wasted it. So, the Chancellor set up his target regime. Alas, that was based on an entirely out of date concept that had not worked in the private sector in the 1970s and 1980smanagement by objectives, setting targets from on high and dictating to the people working, rather than bringing them in and getting suggestions from the coal face on how to do things better.
	We have heard little or nothing of the targets regime because, in the main, it has been a failure. Targets have not been met, they have distorted priorities, and they have greatly upset and demotivated people working in the public sector.
	Last summer, I think, the European Central Bank commissioned a group to consider public sector spending in this country compared with that in other countries. It found that, compared with Japan and the United States of America, our public spending was enormously wasteful, citing a figure of 20 per cent. inefficiency. We were only slightly better than France and Germany.
	Now, the ECB is hardly an organ of the Conservative party, but that is the magnitude of the inefficiency of our public sector. Indeed, that is why the Chancellor was eventually obliged to set up his own Gershon review, after we had started work on our review. I have already said quite a bit about that work in answering various questions, but I repeat the point that if the Chancellor wishes to understand what we are saying, rather than ranting a lot of, candidly, gibberish, he should consider what has been announced area by area in the David James review and what the shadow Chancellor said last spring about the spending plans. He will find that the figures add up perfectly logically.

Sally Keeble: I should have asked the hon. Gentleman this question earlier when he was talking about the James review. Which specific areas should the Chancellor have considered for spending cuts that were excluded from the Gershon review but included in the James review?

Howard Flight: There are a large number of areas. As the hon. Lady will be aware, broadly, the approach of Gershon has been to say, Here are areas where money can be saved, such as better procurement and pooling back offices and various other things. Now, civil servants, try to find 2.5 per cent. savings. I was contacted by a friend who has been seconded to the Home Office who said that people there said, We have not even got proper financial accounts to know what we are spending and how, and how we can effect the economies. That is a measure of how unsatisfactorily our public sector is run.
	Broadly, the James review has considered matters area by area, detail by detail; in only a few areas has Gershon done that. I suggest that the hon. Lady would get an answer to her question if she read the summary reports of the James review and noticed that Gershon has not covered any of that territory.
	I want to move on to two other big areas, but the essence of the pointI am concerned about complacency and, candidly, and so is the Cityis that everybody knows that this country cannot afford not to reduce tax and regulation. We face the challenge of Asia. Most service businesses can move elsewhere and this country has become considerably less competitive. Capital inflows are trailing off quite worryingly and those who come to Europe increasingly go to central Europe, not this country. Unless we make our economy a good deal more competitive, we will have a less promising future than the Chancellor seems to think he is presiding over.
	I want to say a little about pensions. Having talked to members of trade unions, I can see that everyone knows that the one thing that the Chancellor has really messed up has been our pension savings. Earlier in the debate, the Chancellor referred to my comments about the British stock market having halved. He does not seem to understand that as a result, first, of the 5 billion removal of advance corporation tax credit, the stock market fell 20 per cent. further than it needed to have done, because stock markets bottom when dividend yields cross over gilt yields. Logically, had 20 per cent. of dividend yields not been removed, the stock market would have bottomed 25 per cent. higher than it did. The extent of the fall led to forced selling by pension schemes, life companies and individuals, and a fall of 50 per cent. has understandably destroyed investors' confidence. If citizens no longer have confidence in long-term equity saving, it will not be possible for the whole economy to move forward satisfactorily, as that is where the money comes from for real investments.
	A stock market fall of that extent, to which I referred at the time, has had a disastrous effect on equity savings, leading to the unwillingness of people to save. So far this year, there have been net withdrawals from individual savings account schemes. What bigger measure can one have of the loss of equity confidence? Again, if people think that pension funds will be able to accumulate enough through investing in bonds and cash, another thought is coming to them. The only way in which a sufficient amount can be accumulated over the long term is through successful equity investment.
	My real criticism is not just of the 5 billion per annum that the Chancellor has taken away, but of the knock-on effects, which have been enormously greater. Outstanding final salary schemes still have deficits of around 100 billion. Coincidentally, if a price-earnings multiple is applied to the 5 billion loss of incomea multiple of 20 is a fair averagethat is equal to exactly the 100 billion that is missing. More than 10,000 schemes have gone into wind-up, affecting more than 300,000 individuals. As the National Association of Pension Funds has recently warned, three quarters of employers' final salary schemes are facing funding difficulties. As companies must put that money into their pension schemes, that reduces their profits, and as their profits are hit, faith in equity investment in this country is hit.
	I say to the Chancellor that the voters of Britainnot just the financial communityunderstand what has happened and do not like it. They are well aware of the biggest single area in which he has failed seriously.

Martin O'Neill: I was very interested in the speech made by the hon. Member for Twickenham (Dr. Cable) and his desire, reflected in the shadow Chancellor's remarks, to secure a more independent base for statistics. I only wish that the hon. Member for Arundel and South Downs (Mr. Flight) had provided us with some statistical justification or evidence for the assumptions on which he based so much of his arithmetic. Indeed, if one wanted to examine the reasons for the difficult performances in the pensions industry, one need only look at such a so-called specialist and the way in which he glibly manipulates figures to suit his own purposes, as many of us have thought that many of the people responsible for pension funds elsewhere have done in the past. Certainly, such slick arithmetic does not make any serious contribution to an issue that vexes many people and has perhaps created greater distrust in the City and in financial institutions.
	It is for reasons of that nature that we find that the savings ratio is not what we would want it to bepeople do not trust financial institutions, because of mis-selling, bad calculation and failure to take account of basic demography. Consequently, while there may be some lack of sympathy for the performance of this Government in relation to pensions, there is no substitution of sympathy with the Conservative party, as evidenced by its woeful showing in the opinion polls.

Howard Flight: I am well aware of the issue of mistrust in financial institutions. As a bottom line measure, however, does not the hon. Gentleman accept that the fact that ISAsalthough largely about individuals buying individual shares and doing their own thing, and not the same as pension savinghave gone negative demonstrates that people have lost confidence in equity investment? That is the most worrying point.

Martin O'Neill: I am not sure exactly what percentage of ISAs are accounted for by equity investments, in so far as many people take them through building societies and just opt for tax-free interest on a very safe investment. The hon. Gentleman, by his question, has illustrated my point: the evidence that he provides is, to say the least, superficial. We have had a repeated statement from the Chancellor today that the savings ratio has increased by 6.2 per cent. this year. I will not duck the charge that the savings ratio has been disappointing, but it is improving. It may be that people are taking money out of one account and putting it into another, although that is not what I wanted to talk about today.
	The Queen's Speech has an interesting symmetry, because the preoccupation in debates earlier in the week was security, but in some respects no kind of security comes home more quickly to people than economic and financial security. If we are to sustain the economic security that many of our people still enjoy, with many people, certainly in my constituency, in employment for the first time in many years and enjoying a degree of security that they have not experienced previously in their working lives, we must recognise that there is a sense in which any financial or economic advantage that the country has will of necessity be short-lived.
	We talked earlier about investment in research and development, and there was some disparagement of R and D tax credits. It is not long ago, however, that I and others, including Opposition Members, were coming to exactly the same conclusionthat to encourage companies to invest in research and development, fiscal incentives were necessary. There could still be other kinds of financial incentives to encourage investment beyond R and D.
	Let us face it: within British manufacturing, there is still gross under-investment per head. If there is any identifiable factor involved in the poor productivity that besets this country, that is it. In France and Germany, far more money is put behind each individual worker in manufacturing industry in the shape of newer and better kit. I have often argued that the engineering industry could benefit from that to a great extent, and certainly an engineering industry that is currently severely beleaguered because of the sad difficulties affecting part of the car industry, which historically has sourced its equipment from the west midlands and the industrial manufacturing areas of the country.
	The critical point is that were we to see further deterioration in the predicament of MG Rover or the plight of Jaguar, or the failure to secure investment in another model at Peugeot in Coventry, the supply chain for the British motor industry as a whole could become endangered. In turn, that would make it less attractive, particularly for Japanese companies when making decisions on their next model.
	Sadly, the cycle occurs every 18 months to two years. A supply chain is weakened and, having become less successful, is less attractive to potential investors from abroad in the models that we need to go on producing.

Malcolm Bruce: As we would expect, the hon. Gentleman is presenting a very fair analysis of what is going on in the British industrial and manufacturing economy; but is he not opening up a dangerous line of argument? Is he not inviting us to give in to the idea that companies will invest in this country only if we bribe them with taxpayers' money? Surely we want them to invest in this country because it is the right place to be.

Martin O'Neill: I understand the hon. Gentleman's point, but it is not the point that I am trying to make. I am saying that the engineering supply chain for the motor car industry is currently fragile. We do not want to see a continuing deterioration in what might be regarded as the two UK bankers. Companies such as Jaguar are prestigious, and companies such as MG Rover still account for a large volume of orders, although perhaps not for a large volume of output, but many traditional manufacturing supply chain companies operating in this part of the world and the economy are fragile at present, and if they fell by the wayside Japanese companies would find inward investment less attractive.
	Those companies do not necessarily need bribes any more, because we have a good labour force, good industrial relations and high productivity levels. We are confident that there will be demand for our product in the UK. However, they tend to operate on a just in time production basis. They need essential spare partswidgets and so forthto be close at hand: they need them yesterday, virtually. That becomes rather difficult if the supply chain extends to Budapest or Bratislava.

John Taylor: Or China.

Martin O'Neill: Perhaps China eventually. Anyway, I was making that point, not a point about assistance.
	Nevertheless, assistance is important. Regional selective assistance is possible under European Union arrangements, although it is on a smaller scale than it was at one time. I understand that the Liberal Democrats in Cornwall and elsewhere in the west country believe that they can go to Europe and get more money because the budget in the area is being cut: that was suggested in a document from the west country that I saw yesterday. There is no magic wand, however, and RSA is nothing like the crutch that it once was.

John Taylor: The hon. Gentleman has visited most of the motor industry so far in his excellent speech, including Peugeot, Jaguar and Longbridge, which makes very difficult reading in the business pages nowadays. However, he has not mentioned another important west midlands motor manufacturerLand Rover, in my constituency, which is critical to the many surrounding industries that supply it. Will he comment on Land Rover? I shall be content if he merely wishes it well.

Martin O'Neill: I think that the Ford PAG group, of which Jaguar, Land Rover and Volvo are all part, is vital to the high-quality end of British car manufacturing. We all want those companies to succeed, and I think we are confident that they can. The difficulty, especially in Jaguar's case, is short-term, and we hope that it can be solved. Sometimes when we start discussing the prospects of companies here, we draw attention to them in ways that may not be intended.
	Let me take up a point that was made earlier. The Government should realise that if we are to have a research and development-led industry and promote the transfer of technology from the university laboratory to the workshop and larger areas of production, we must be sensitive to the plight of the unincorporated bodies that universities have created. That is an example of the law of unintended consequences, and I shall be very disappointed if the Chancellor does not find a way of dealing with it constructively and sympathetically. It may not be appropriate for him to refer to it tomorrow, but he could do so in his Budget speech, and it could be addressed in the Finance Bill. It should be recognised that it is through investment in science in the United Kingdom that we shall secure continuing development of science-based industry.
	We keep talking about India and China in debates of this kind, but they are not necessarily the same. India has been able to invest in its fantastic output of graduates and in the Bangalore information technology areas, to provide world leadership, and to make a far more significant economic contribution than is represented by a couple of hundred thousand jobs in call centres. Apart from outsourcing and those call centre jobs, there are 200 million people in India who would be classified as middle-class. They are potential consumers of many of our goods and servicesfinancial services, Burberry raincoats and scarves, Johnny Walker Black Label and all the luxury products that so many of our businesses should be getting out there and selling.
	Many of our ambassadors should recognise that they are there not just to outsource but to outsell those in other parts of the world. Conservatism, with a small c, and protectionism feature in the thinking of too many of our people.
	China is a slightly different matter. It is self-evident that Taiwan, the offshore part of China, has turned its back on the type of manufacturing for which it was famed in the 1950s, 60s, 70s and 80s. It is now the largest single inward investor in mainland China. Its kit is being produced in China and is returning to Taipei and the surrounding area, where only the widgets are added. China may be a workshop, but in Beijing and Shanghai it can be seen that there is a demand for consumer goods. It may not extend much beyond those cities at present, but it will do so at a great rate; and if we are not there selling those goods, you can bet your bottom dollar that the Italians, the Germans and others will be. We must organise a much more concerted push to sell our luxury products.

Rob Marris: And our Jaguar cars.

Martin O'Neill: Yes, those as well. One of the frustrating aspects of visiting China is that if you are going to get knocked over, it is a pound to a penny that you will be knocked over by a Volkswagen. Volkswagen has cornered the market there to a fantastic extent.
	We must take advantage of this opportunity. Our country has many of the most attractive features for inward investment. We have a stable labour market, flexibility and high productivity among those employed by inward investors. The Government's economic legacy has enabled us to build on many of those attractions, but if we are to secure the future of the economic success that we have achieved we cannot just depend on the ability of Britain, as currently constituted, to attract investment from within and create the research and development that we need. We must have inward investment as well: there must be a balance.
	Those who seek to make economies by doing away with this or that Department should bear it in mind that the civil service and public bodies will be required for many of the functions to which I have referred. Some Liberal Democrats may well want to get rid of the Department of Trade and Industry; but do they want to get rid of the offshore supplies office in Aberdeen, which serves the North sea industry? Do they want to get rid of the expertise of the Department responsible for energy? If they do, there might well be serious consequences[Interruption.] Oh, they want to get rid of everything but that.
	As a Scotsman interested in energy matters, I should point out that such issues are easy game. Across the country as a whole, every one of the bleeding-heart Liberal Democrats who wants to appear liberal would indulge in special pleading for the little niche that is for ever theirs. They may say, But you couldn't do away with that, but which bits could we do away with? Which bits do they not like too much? Which bits are concentrated only in Tory or Labour seats, or in Victoria street? [Interruption.] They do not like it when the cheap shots are aimed back at them. The truth is that many of us believe that if we are to reform the machinery of government, it is industries such as the hospitality industry that should be reformed. It should be dealt with by a department of enterprise and industry, rather than by the Department that looks after museums and castles.

Malcolm Bruce: Perhaps it is appropriate that I should be called after that little diatribe. I should tell the hon. Member for Ochil (Mr. O'Neill) that we Liberal Democrats certainly do not regard energy as a niche market. We have consistently arguedthe point is made in our published policy papersthat energy should be dealt with by a department of energy, environment and transport. If we are to meet our Kyoto objectives, it is logical that all the factors that cause emissions be dealt with together, rather than being split among several Departments. I hope that that illustrates that the essence of what we are trying to do is to simplify government, reduce the number of Departments and operate more efficiently.
	We believe that it is inefficient for the Government, through the Department of Trade and Industry, to engage with industry by trying to second-guess the market and use taxpayers' money to induce businesses to take decisions that they would take anywayin which case, the money has been wastedor to take short-term decisions in order to qualify for tax incentives that do not stick in the long term. There is plenty of evidence to show that in many cases companies are happy to take the money, but that they take a different decision when the money runs out. We are talking about substantial sums, and we have set out the figures in our existing policy documents. We will publish in more detail the logical consistency of our proposals.
	I am very happy to debate this issue with the hon. Member for Ochil, and let us be clear: there can be an honest difference of opinion about the proper role of Government in business and industry. In our view, that role is to make life simpler and less regulated, to simplify the tax system and to enable businesses to get on with the job that they do best: running themselves, rather than having to engage too much with civil servants, and having bureaucracies tell them how to run their affairs.
	I want to address one or two issues that are of concern to my constituents, as well as other aspects of economic policy. As a Scottish Member of this Parliament, I hope that in the coming years we will develop greater co-operation between Scottish MPs and the Scottish Parliament. Like every Member of this House, I am very worried about the GP out-of-hours service. This issue is relevant to today's debate because it shows there is a crossover in respect of what this Parliament does and what the devolved Parliaments do. Health is a devolved matter, but of course the reality is that the change in the out-of-hours contract was determined by negotiation across the UK. The fact that GPs no longer wish to work such hours might be a reasonable proposition, but it causes difficulties across the piece. UK Ministers need to work with the devolved Assemblies to ensure that we train enough doctors and consultants to cover the service and fill the gaps. I hope that we can do so in future.
	I am also concerned about transport. Two of the transport Bills proposed in the Queen's Speech have implications for my constituents, and we need to know the reality of the situation. Are we getting a significant devolution of strategic decision making to Scotland, or does such legislation constitute an abdication of responsibility for those living north of the border? That issue needs to be clarified.
	My constituents were incensed when the Strategic Rail Authority said that it would no longer support the upgrading of the service between Aberdeen and Inverness because of the unexpectedly high and over-budget cost of upgrading the west coast main line. That service runs from London to Glasgowin other words, it terminates 140 miles from Aberdeen. Although it may be of some benefit to my constituents, most of the traffic between Aberdeen and London is on the east coast main line. It is therefore frustrating to be told that the upgrading of a line that does not directly serve my constituents is being used to justify the cancelling of promised investment.
	If the devolution of funding to the Scottish Parliament enables the reinstating of such investment, that would be welcome. If, on the other hand, it means that the UK Government are simply abdicating their responsibility for strategic decisions on rail matters affecting my constituents, that is another matter altogether. I was not encouraged on hearing the Under-Secretary of State for Transport, the hon. Member for Plymouth, Devonport (Mr. Jamieson), say that for franchising purposes the east coast main line runs from London to Aberdeen but that for investment purposes it runs from London to Edinburgh. That makes it clear that there is no commitment to strategic investment in that line, even though it is the main line between Edinburgh and Aberdeen.
	It takes nearly as long to get from Aberdeen to Edinburgh as it does to get from Edinburgh to London, despite the fact that the distance involved is little more than 100 miles. If there is to be a strategic decision, it should ensure that remoter parts of the country have access to fast transport, especially given the argument that too many people are flying internally in the UK when they could be taking the train. I would like to agree, but I can assure hon. Members that, as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) will confirm, it would be impossible for me to carry out my duties as a constituency Member and to serve in this House if I relied on the rail service. I have no option but to fly, which is regrettable, given the need to address such issues and their long-term environmental consequences.
	I have a constituency interest in energy, an issue to which the hon. Member for Ochil referred, but in this debate I want to link together national and constituency concerns. In some respects, the recent increase in gas and electricity prices is entirely understandable, but in others it cannot be easily explained, and it does not seem to demonstrate the efficient functioning of the market. Those of us who monitor the industry know that many long-term gas contracts have come to an end, at a time when oil prices have been rising sharply. That has become an excuse and created a market gap, which has led to an increase in gas prices, but that does not explain why UK producers are exporting gas to the continent, where prices are lower, rather than supplying the domestic market, where prices are higherunless there is another, perhaps ulterior motive relating to the long-term control of market supply.
	I have pointed out that we Liberal Democrats are concerned about the fact that this country's emissions are increasing, despite our obligations and commitments under Kyoto. I do not regard rising energy prices as inherently bad, given that such increases probably encourage the more efficient and environmentally sound use of energy. We nevertheless have to accept that if they jeopardise businesses and increase fuel poverty before the mechanisms to deal with such poverty have come into play, genuine concerns will be expressed in all constituencies, including mine.

Robert Smith: The Government will soon take over the presidency of the EU. Is it not also an important time for them to work out how to force the rest of Europe to recognise that the liberalisation of the energy and gas markets must be carried out across the whole of Europe? It is important to realise the distorting effects caused by the liberalisation of our market and its being attached to a market that is still under the firm control of the big suppliers.

Malcolm Bruce: The Conservatives may not like the implications, but the reality is that a Europewide energy market, if it is open and transparent, would be to our benefit. Our concern is that liberalisation is not proceeding fast enough.
	I have written to the new Energy Commissioner, asking him to look further into that, as well as to the Secretary of State. I have been criticised by some people who claim that what I am saying implies a dislike of markets. I favour markets and market solutions, but there is something not quite right about this market at the moment. It has been a matter of concern to me that gas prices should automatically be determined by oil prices rather than by the actual costs of production and the fact that the market is not always the same.
	I spoke a week or so ago at the annual conference of the Combined Heat and Power Association, which may not be at the top of people's agenda as the best place to speak. I have to say that I have not seen a more depressed looking audience for quite some timeand that was before I spoke. The serious point is that several billion pounds of significant investment, which could create many thousands of jobsI already know of more than one Conservative early-day motion on the subjectare currently frozen. Those funds could genuinely help us to improve industrial investment, employment and our commitment to reducing emissions.
	In the past few weeks, I have had interesting meetings with a significant number of businesses in my constituency, and many specifically welcomed the consequences of EU enlargement, not least in giving them access to good-quality, hard-working labour, which has helped them meet the significant shortages that they were experiencing until recently. One enterprise in the tourism sector had employed a substantial number of Slovakian young women in an enterprising leisure facility. Those girls had come here for two fundamental reasons: to learn English, which they view as an international language that will improve their skills; and to gain more productive and better paid work experience than they could gain in Slovakia. It is important to understand that that is of real benefit. Prior to enlargement, this business found it extremely difficult to get exactly the sort of labour that it required and is now delighted with the quality of staff that it has been able to recruit.
	I fear that debates on immigration are sometimes conducted in the House in a way that fails to emphasise the significant benefits that can accrue. It may be of interest to the House to know that the city of Aberdeen has specifically said that it believes that its economic future depends on recruiting a substantial number of the work force from the new accession countries. It has taken a positive step to promote the virtues of living and working in Aberdeen to those people. It will help the economy to be dynamic rather than run the risk of having to export jobs to where the people are. We often lose sight of that fact, which is a consequence of not being able to recruit labour here in the UK. I have heard that general complaint from many businesses in my constituency.
	I mention in passing that, as a member of the plenary assembly of the Council of Europe, the UK delegation will debate in January next year the issue of trafficking from the borders of the EU, and the Balkans in particular. I believe that trafficking is too kind a word. We are talking about slavery, and people being sold, often by their families, into slavery. The exploitation of these people is vicious, and some of our more draconian immigration laws make it harder for them to break out of it. We must make it clear to people that if they have been brought here by force, they can appeal. The fear is that if they make themselves known to the authorities, they will be immediately deported without help or subsistence, so we must show that we have some sort of compassionate rescue mission to deliver people back safely to their families under terms and conditions that will prevent them from being exploited in that way again.
	My hon. Friend the Member for Twickenham (Dr. Cable) made a passing reference to the British trade position, the exchange rate and the consequences of American policies. One general problem with US domestic policies is that they seem to constitute the worst excesses of left and right-wing ideologies brought together in one regime.

Rob Marris: That sounds like your party.

Malcolm Bruce: I would argue, in defence of my hon. Friend the Member for Twickenham and my own record when I was in the same post, that it is precisely not like our party, because we cost our proposals and try to demonstrate, even though it opens us up to pretty strenuous debate, how we would pay for our policies. We say what taxes we would or would not alter. What has happened in the US is that the public deficit has gone through the roof and tax cuts have been implemented that are clearly not sustainable. Yet as long as the rest of the world is prepared to support that by accepting devalued dollars, we cannot really blame the American Administration for taking advantage of it.
	I would say to the Chancellor that one of the disadvantages stemming from having our own currency is the fact that it is not a very important currency. It certainly does not play influentially in the markets in the way that the euro currently does. There may well be an argument, as Mr. Anatole Kaletsky suggested, for the eurozone to cut interest rates in order to put inverse pressure on the dollar and perhaps also help stimulate the European economies to perform rather better.
	Having attended the breakfast that the Chancellor provided for board members of Britain in Europe a couple of weeks ago, I know that he stressed the importance of the transatlantic relationship. Although I have been critical of the Bush Administration, I also support the transatlantic alliance as part of the UK's position in the world. If we have a special relationship with the US, however, it is important for the Americans to know that we also have a dimension of European co-operation and solidarity that is important to us. We should also expect Americans to take some responsibility for conducting themselves in a reasonable fashion in the world or to expect the consequences if they fail to do so.
	I make no apology for mixing in some important constituency issues put to me in recent months. Indeed, debates on the Queen's Speech provide an excellent opportunity to do so. I have considerable scepticism about a Government who announce 32 Bills or draft Bills in any Queen's Speech, especially in a programme that everyone expects to be interrupted before half the Session is completed. We should acknowledge that much of the Queen's Speech is not a serious programme of legislation but a shopping list for a general election. It is frustrating to find, in seeking clarification from Departments as to which Bills will be introduced and when, that the answers become heavily caged according to political expediency.
	In the few seconds left to me, I want to say that the one Bill that I am assured is likely to be introduced before Christmas is the consumer credit Bill. If that is the case, I welcome it, but I hope that the Government realise that we are talking not just about loan sharks but about shameful practices being pursued by high street banksthe biggest banks in the countryto push people into using credit and to sell them products that are much more expensive than they need be. Those banks are happy to take the excess profits that result. The legislation must deal with that problem. We should also recognise that door-to-door cash collection is not always against the interests of people on low incomes. It sometimes helps them to manage their credit, so we should not legislate that out of existence and open the way for the criminals who would inevitably step in.
	This is a rag-bag of a Queen's Speech. It is really an election propaganda message, so I hope that hon. Members will support our amendment.

Denzil Davies: It is only right and proper for the Chancellor to remind the House of his and the Government's fine record of economic stewardship over the past seven years. It compares more than favourably with most, if not all, western European countries and the Government deserve credit for it. We do not always acknowledge the external pressures of globalisation on western economies. I do not believe that our Government, western Governments or even fashionable opinion have begun to engage with the consequencessocial, foreign policy and economic consequencesof globalisation, despite the fact that countries such as China now dominate large sections of world trade.
	Many hon. Members have always been concerned, rightly, about the effect of globalisation and the dominant influence of multinational companies on the poorest developing countries. On the other side of the argument are those who worship at the shrine of the free market and free trade, who see no adverse consequences to globalisation and brook no criticism of it. Indeed, the Director-General of the CBI appears to have been one of that cult's high priests in recent years. I read in the newspapers some extraordinary comments from himperhaps he was not correctly reportedabout the outsourcing of employment from Britain to places such as Bangladesh and India. He seemed to favour that and to want to see more of it. I do not think that he fully realises the consequences, but I await with interest an announcement in the near future that the bureaucracy of the CBI will be transferred to Bangladesh or Bangalore.
	The anti-globalisation protestors and the pro-globalisation zealots display a lack of awareness that the pressure of globalisation is felt most by western countries. Western capitalism cannot cope with global capitalism. Countries such as China appear to be able to do capitalism with greater energy and ability than countries of the west, particularly the United States of America. We have heard about the balance of payments deficits in the US, but it arises in the main from trade with China, perhaps because of the traditional links that have always existed between the two countries. The devaluation of the dollar against the euro, which is no doubt happening as we speak, will not help the US very much with the massive balance of payments deficit it has with Asian countries, especially China. As we all know, the Chinese currency, the renminbi, is linked to the dollar, so as the dollar goes down, so does the renminbi. That is what is happening at the moment.
	There is pressure on the Chinese to revalue their currency. They might or might not do so, but they will do so only if they believe that it is in their long-term trading interests.

Angela Eagle: Does my right hon. Friend have a view on the unprecedented situation in respect of global monetary structures? The Asian currencies are pegged to the dollar and other western currencies are floatinga hybrid system unlike any that we have experienced before. The globally dominant currency, the dollar, is experiencing pressure. Does he have any views on what might happen?

Denzil Davies: I do not know how it will unwind. There have been calls for China to be brought increasingly among the main economic nations, but the Chinese will probably go their own way and make their own decisions in their long-term trading and security interests.
	The pressures on the US are considerable. An American think-tank recently looked at the prices of products in the US and in China. Prices in China were 30 to 50 per cent. below the cost of production of similar or identical products in the US. Such pressure cannot continue without destroying a country's industrial and economic base. It will mean a massive transfer of wealth from the US, which is already happening, and ultimately from the countries of western Europe to China and other Asian countries.
	The European Union used to believe that it was immune from such pressures. Those of us who have sat through many debates on the EU remember that it was said that one of the reasons for its formation was that it could be ring-fenced. The common agricultural policy was a manifestation of that thinking. The countries of the EU, it was believed, could trade with each other and would not need to trade with anyone else. However, that world is going or has gone. Apparently, 10 years ago the EU had a surplus on its trading account with the countries of Asia and China. It now has a deficit of $10 billion, and that is with a low rate of European growth. The EU is not capable of withstanding the pressures that we will see from China and other Asian countries.
	The problem is not only the balance of payments, but costs, wages and profits. The pressure on wages is now considerable. Last month, the average yearly increase in wages was 3.7 per cent., which is well below the Bank of England's 4.5 per cent. figure used in analysis of inflation and other factors. The minimum wage of 4.85 is fine, but my impression is that wages, certainly in the manufacturing sector, are gradually being driven down towards 4.85. That figure is seen as a respectable amount, so the pressure driving wages down is considerable. Of course, that has implications for the Chancellor. He subsidises wages through the working tax credit, and the cost of that subsidy will probably increase.
	If costs cannot be reduced and prices cannot be increased, companies' profits will be affected. If profits do not go up, investment cannot be made. What about the effect on tax yields? No one has studied the effect of globalisation on tax yields, but if wages are driven down, yields from income tax will fall, unless more people can find work. Indeed, the Chancellor's estimate of revenue from income tax fell short. VAT is a tax on prices. If the price of imported goods falls, and the price of domestically created goods falls in competition, the VAT yield will be reduced. Perhaps that can be made up by VAT on services or in other ways, but the fact remains that globalisation pushes down wages, costs and prices. If it pushes down profits, the yield from corporation tax will also fall. Governments may have to look at ways of raising money from taxation other than the main taxes of income tax, VAT and corporation tax, because of the effect of globalisation.
	In many ways, globalisation has had a benign effect on inflation. Prices have been driven down. The high inflation of the 1980s has gone, mainly because of competitive global pressures. Japan still has zero interest rates, because some people are now more worried about deflation than inflation. Alan Greenspan in the US was so worried about deflation that he reduced American interest rates to almost 1 per cent., although they have now gone up by a few quarters of a percentage point.
	Our central bankers still try to claim the credit for reducing inflation. We have heard again today how wonderful the Bank of England is, and I bow at the shrine, albeit a little reluctantly. We have heard how wonderful it has been in keeping down inflation, but that is putting the cart before the horse. It is international competition that has pushed down prices. The governors of central banks, who are usually behind the curve, follow that by reducing interest rates. I accept that that is not a fashionable view, but I believe it is a better explanation.
	The trouble is that those central bankers keep looking for inflation everywhere; they are a bit like generals who cannot find an enemy. For central bankers, the reds are still under the bed, and they are inflation. The Bank of England looks for inflation all over the place. I do not know how an interest rate of 4.7 per cent. can be justified when the consumer price index, flawed as it may be, is only, as the Chancellor told us, 1.2 per cent. It was a mistake for the Bank to raise interest rates on the last few occasions so that the rate is now 4.7 per cent. The signals coming from the Bank are extremely confusing, almost as confused as the Organisation for Economic Co-operation and Development report about which I read in the newspaper today.
	We cannot wish away globalisation. Some of the effects have been benign and beneficial, as I have tried to point out, but there is a danger when a huge country such as China begins to dominate world trade in goods and can make such inroads into the productive capacity of western countries. We have to consider whether we can bear the substantial transfer of wealth from western countries to such countries, as the effects on standards of living, taxation yields and public expenditure will be considerable. The time is past when globalisation can be viewed merely as a consequence of free trade and countries such as China can be described as trading partners rather than as competitors. That type of imbalance makes a mockery of Ricardo's economic tenet that trade is good for all, because each country can export the products that it is good at making. That is no longer the case when a country such as China could completely dominate world trade.
	It will not be easy to try to alleviate the consequences of globalisation and to stem the seepage of wealth from western economies, but we should at least recognise that there is a problem and that it cannot simply be left to the free market. Governments, whether of the left or the right, will have to interfere again to protect their economies, industries and societies from the pressure from free trade and globalisation. Once we acknowledge that there is a problem, perhaps we can find ways of countering it.

Mark Prisk: I am delighted to have this opportunity to contribute to an important part of the Queen's Speech: the economic affairs that underscore the country's wealth and prosperity.
	I want to turn from the broad landscape of the global picture of economic affairs to something more local but just as importantthe concerns of small businesses and the self-employed. I do so both as someone who was self-employed for more than 10 years before I became a Member and as honorary treasurer of the all-party small business group. I am especially pleased that it is the largest all-party group and I hope that that reflects the genuine interest and concern of all Members in the importance of small enterprises.
	There are 3.8 million small businesses in the UK and 3.6 million people are self-employed. Those distinct but overlapping groups represent the backbone of our economy. After all, they employ more than half the private sector work force and they generate much of the wealth that enables us to afford the public services that we debate in this place. They are also often the most entrepreneurial and innovative enterprises in our economy.
	There is an additional reason why I believe that small enterprises matter; indeed, it is one of the reasons that I joined the Conservative party. Family businessesthe self-employed and small enterprisessend out a clear message that no matter what someone's background is, whatever the colour of their skin, whatever their race or creed, if they have the ambition, the ability and the will to work they can be their own boss and make their own way in the world. That is a very powerful reason for us to consider the role of small businessesnot only in the context of the economic debate that we are holding today, but because those businesses reach beyond mere economics.
	As a former freelancer, and having met many of the small business organisations in my constituency, it is clear to me that entrepreneurs are struggling. They tell me that they are struggling for two main reasons: the burden of regulation and the burden of the tax system. It is evident that both the volume and scope of regulation has worsened over the past seven years. We know that there are 15 new regulations every working daya 53 per cent. increase since 1997. In absolute terms, the number is between 3,500 and 4,000 in any one year.
	I am well aware that many of the regulations come from Brussels, but the majority still come from Whitehall. It is fair to say that Whitehall managesextraordinarilyto make EU regulations even worse than they might otherwise be, but nevertheless regulations, and their burden, matter. They matter not simply as a debating pointin the jousting between the Opposition and the Government in this placebut because, no matter what their worthy aims may be, the costs of complying with regulations and of administering them actually count for businesses. Let me give a short example: the working families tax creditapparently worthy in its aim, whatever one may think of its merits as a systemcosts business 105 million every year to administer. That is a significant amount for business to take on, and it is but one measure. I know that it is a favourite of the Chancellor's, and given that tomorrow's will, I hope, be his last pre-Budget report, I hope that this measure will go with him. When the Secretary of State for Work and Pensions replies to the debate perhaps he will enlighten us on what I am sure the Government will wish to claim is their radicalnay, modernisingagenda to seek to reduce this burden. I look forward to his eloquence on that point.

Rob Marris: rose

John Bercow: rose

Mark Prisk: I give way to my hon. Friend the Member for Buckingham (Mr. Bercow).

John Bercow: I am grateful to my hon. Friend for giving way because he is truly rivalling Cicero and Demosthenes in terms of the eloquence with which he is addressing the House. In the light of his philosophical points, may I put it to my hon. Friend that he should endorse the words of the late and great Winston Churchill, who famously said:
	The . . . vice of capitalism is the uneven division of blessings, while the . . . virtue of socialism is the equal division of misery?

Mark Prisk: Far be it from me to seek to compete with Cicero, but my hon. Friend has made his point well and I have no doubt that when it comes to awards, the one for the most sincere impression of Cicero will go to him, not to me.

Brian Cotter: What tangible proposals does the hon. Gentleman have to reduce regulations? We all agree that this is a very big problem; will he give us a flavour of what he feels we should do about it?

Mark Prisk: It is always dangerous to try to answer such interventions in full, but I try to do so. In this case, let me simply say that I shall be touching on one measure in a moment, but first let me give another example of regulationthe ridiculous six-step, three-formula rule on abnormal rents, which Labour Members pushed through and which will have a punitive effect on business leases. I shall enlighten the House on other measures later.
	I have talked about the costs of complying both in time and money, but another problem with regulation is that it restrains enterprises; it restricts their ability to compete in the international world. I am not afraid of the international world, and neither, I am sure, is the right hon. Member for Llanelli (Denzil Davies), but as the burden of regulation has increased this nation's ability to compete has declined. We have moved from the fourth most competitive nation in the world to the eleventh in just seven years, and that is a very disappointing trend.

Rob Marris: The hon. Gentleman mentioned the working families tax credit and its 105 million cost per year, which he saw as a burden on business. Is he aware that research from the Department for Work and Pensions shows that almost 90 per cent. of employers have no problem whatever with administering that tax credit?

Mark Prisk: My hon. Friend the Member for Havant (Mr. Willetts) highlighted the change that will happen, but if the hon. Gentleman were to talk to businesses in Wolverhampton he would find a very different picture from that portrayed in the Government statistics that happily spew out of Whitehall. Indeed, I have found that, for many small entrepreneurs, the problem is one of time. The Federation of Small Businesses found that the average time involved in dealing with the cumulative impact of regulations is now over 28 hours a working month. Many of those present will realise what an impact on family time that clearly has on many small businesses, and it is an unsustainable burden. That is why more and more of what I would describe as the serial entrepreneursthe people who create and recreate enterprisesthe people whom we want to keep, are retiring or selling up. That is a significant drain on the skills and the ambition that this country can ill afford to lose.
	Over the past seven years, the tax system, as part of the regulatory burden, has become hideously complex. I am delighted that the Chief Secretary to the Treasury has joined us, albeit briefly. He will recall that this year's Finance Bill contained 310 clauses and more than 500 pages of new tax rules and regulations.

Rob Marris: Lovely.

Mark Prisk: Labour Members might regard that as lovely, but I suspect that their view is not shared by their taxpaying voters. It is a symptom of a Chancellor who, frankly, cannot help meddling, interfering and tinkering. Every year we have a raft of new rates, thresholds and rules. Let me, if I may, offer a classic example that directly affects small businesses.
	In 2002, the Chancellor introduced a zero rate of corporation tax on the first 10,000 of profitsapparently a very good idea, although the Government had not looked at it carefully. Of course it created a significant tax advantage for small firms to incorporate. Indeed, as I recall, the Paymaster General told us that this was a gift horse, which small businesses should not look at in the mouth. That was the exact quote; I apologise for the English. However, the result, of which the Government had been warned, was a massive 43 per cent. increase in incorporations in the first 12 months. That was far more than the Government had expected, so suddenly they realised that they were losing more than 1 billion, as I understand it, in tax revenue that they had not accounted for. Suddenly, we were warned by the Paymaster General that this was not a gift horse but a tax avoidance schemewhat a farce! To compound the error, they have proceeded not to reverse the policy and admit their own error but instead to add a further change with a 19 per cent. non-corporate distribution tax rate, to try to recoup the loss. Therefore small businesses have in three years seen four changes on different rates, which directly impact on their profitability. That is a measure of the tinkering and meddling of this Chancellor.

James Plaskitt: Will the hon. Gentleman give way?

Mark Prisk: No, I am sorry but I am short of time.
	We also had the farce of the IR35 regulations on the self-employed. That is a crude attack on freelancers and the self-employed. The regulations create barriers to work, especially in information technology. Even worse than that, however, despite being warned at the start that they would cost the Government 900 million and that they must act immediately, we discover three years on that, of the 500 cases that the Inland Revenue brought to challenge that apparently pernicious threat, it has won fewer than twoa woeful record. It has created enormous uncertainty for thousands of entrepreneurs and enormous legal bills for taxpayers.
	In conclusion, small businesses do not want the Chancellor interfering and meddling. They want smaller government. They are fed up with being unpaid tax collectors and unpaid benefit officers for the benefit of the Government. They want fewer, not better, regulations. Above all, small businesses want to know where they stand.

James Plaskitt: Will the hon. Gentleman give way?

Mark Prisk: No.

John Bercow: This is the peroration.

Mark Prisk: It is a long peroration, so hon. Members must be patient.
	Small businesses need a tax system that is not more complex, constantly changing and something that they can never trust. They need a tax system that is simpler, fairer and lower. Frankly, this Labour Government have failed to deliver for small businesses. They talk positively about deregulation, yet they pass more regulations. They talk warmly about tax reform, yet what have they done? Each year, they have passed a record-sized Finance Bill, with more rules, regulations and statutory instruments. That is the truth and the evidence of their record.
	Despite the talk, the result of all that is that when I talk to small business organisationsI am sure the same thing happens when many of my colleagues speak to themI discover that they have finally realised that behind the spin and the smokescreen this Government will never deliver for them and that only the Conservative party understands small businesses. Frankly, it is only a Conservative Government who will deliver for them.

Tom Clarke: Not only am I delighted to contribute to the debate, but I do so with real pride, rather than fear. I am enormously proud of the record for people in my constituency who have told me how much they have benefited from the various measures introduced by the Government, and who are encouraged by the promise that the Queen's Speech holds. They share my pride in having the lowest interest and mortgage rates for nearly 50 years, the lowest inflation for 30 years and the highest employment since the 1970s. The fact is that millions of people, whether they are young or old, or have young families, are benefiting from those hard-won gains, and I notice that the statistics have not been contested.
	A record number of people are in work. That has to be a welcome development for hard-working families in constituencies such as mine, where unemployment is down by 37 per cent. and about 1,640 people have got jobs thanks to the new deal. Moreover, the Government are doing more for pensioners than any other Government at any time in our history. In my constituency, the winter fuel allowance alone warmed the homes of 12,286 pensioners in 2004, and Labour is helping all pensioners to enjoy a decent and secure retirement.

John Taylor: Will the right hon. Gentleman be broad-minded enough to concede that the Chancellor of the Exchequer delivered a savage and severe repeated annual blow to occupational pensions of a 5 billion impost, which damaged those pensions and added to the demoralisation of the stock market?

Tom Clarke: I would do a great disservice to the facts, and not reflect the views of pensioners in my constituency, were I to do as the hon. Gentleman asks. I do not know the figures for his constituency, but I am sure that he is broad-minded enough to acknowledge that the 3,775 pensioner householders in my constituency who now benefit from pension credit, which is worth an average of 41 a week, did not receive that under a Conservative Government. That is a welcome change.
	Had I said before 1997 that the Government would be able to manage such a turnaround of fortune for my constituents, and for millions of other people the length and breadth of Britain, my claim would have been greeted with sheer derision by Conservative Membersor at least, by those who attended such a debate; there are few present today. One of the reasons for the deep gloom that I observe among Opposition Members is that the Government's record has wiped the smile off their faces and encouraged a real glow among millions of vulnerable people, including pensioners.
	Let me give an example: only last week I received a phone call from a woman who had just collected 400 to help with heating and council tax. She said, Mr. Clarke, I would like to thank you very much. I am 82 years of age and I have never held that amount of money in my hand in my life. That is little wonder when we consider how few years the Labour Government have been in office compared with the Governments of the past century.
	The Queen's Speech is not only about young people and the elderly, important though they are; it is about children, too. The Conservatives left us a shameful legacy in the form of one of the highest rates of child poverty in Europe: one in three children were living in real poverty. Our mission to end child poverty is grounded in our determination to secure social justice. I shall not be satisfied until child poverty is abolished completely, at home and abroad. I heard what the Chancellor had to say today about his policies on international development, but, domestically, child tax credit and working tax credit awards are helping 6,400 hard-working families in my constituency alone. I welcome that.
	Having taken the courageous decision to give freedom to the Bank of England, we must not, and will not, repeat the mistakes of the past. We shall never return Britain to the boom and bust of the 1980s and early 1990s, when mortgage rates hit 15 per cent. for a whole yearmy constituents will certainly never forget thatthe homes of 250,000 families were repossessed, and 1.5 million suffered negative equity. People are proud of their homes; home provides a sense of security and much happiness for many. That is why mortgage rates are of the utmost importance to the electorate. Sustained low rates are saving mortgage payers an average of 2,600 a yearalmost 220 a monthcompared with life under the Conservatives.
	Last week the Leader of the Opposition was campaigning in Cornwalla county bereft of Tory MPs. The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) took over from the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) a year ago, but the polls suggest that he is just as unpopular with the voters. No wonder the mild-mannered, erudite Jeremy Paxman, who covered the visit, headlined the report Same Old Tories. That reminds me of the past.
	Fifty years ago was the decade in which Prime Minister Harold Macmillan told us we'd never had it so good. Life in the 1950s was considered to be simpler, better and free from the ills of modern society . . . That's the theory. In practice, a survey suggests that life is much better now than it was 50 years ago. In 2004 we are generally more prosperous, do not work as hard and enjoy a far more comfortable lifestyle than in 1954.
	I have quoted from last Monday's edition of the Daily Mail, so it is official. As Macmillan said, we have never had it so good. In view of the Chancellor's impressive handling of the economy, unmatched for a very long time, perhaps we should brace ourselves for the Daily Mail's next headline, Britain under Brown is even better.
	Returning to my main themejobs in my constituencyI shall set out two excellent examples and refer to two separate issues on which I believe the Government must do more.Within the village of Gartcosh in my constituency there is a large derelict site. Under the previous Government it was a thriving steel strip mill employing 600 workers. Since the closure, which I campaigned against, I have continued my campaign to have the site redeveloped and prepared for meaningful jobs.
	I am delighted to say that last month I learned that Scotland is to get a new-style crime-fighting agency, which will gather together several key law enforcement agencies on one site, and it will be based in a purpose-built headquarters at Gartcosh. Discussions about the new centre of excellence are still at an early stage, but significant resources have been made available to enable planning to get under way. A new organisation will tackle the growing and evolving threat from serious and organised crimesomething that is addressed in the Queen's Speech.

Howard Flight: Does the right hon. Gentleman not have any concern that what he has lost was a business that was producing wealth, whereas what he has gained is something in the public sector that will be living on his constituents' taxes?

Tom Clarke: I had great concern, which I expressed in the House, about what the previous Government did to the steel industry, and what is still being done. If that has led in some way to an increase in crime, I certainly welcome the jobs and the opportunities that will offer themselves.
	The Serious Organised Crime Agency for Scotland will house the Scottish Drug Enforcement Agency as well as the forensic science department of Strathclyde police. It is understood that the Scottish arm of the National Criminal Intelligence Service, prosecutors from the Crown Office, Customs and Excise north of the border and immigration service workers could also be relocated to the site. I am pretty sure that the hon. Gentleman will welcome all of that in the fight, in which we all join, against crime.
	It is anticipated that the development work on the new crime campus could start as early as next year, with completion expected in 200607. So the hon. Gentleman has helped me to make the point that under this Government the old Gartcosh steelworks is like a phoenix. It is about to rise from the ashes of 18 years of waste under the Conservative Administration and to go places. I am delighted that my constituency will accommodate this new modern facility.
	As I turn to another important issue for my constituency, I welcome the presence of my right hon. Friend the Secretary of State for Work and Pensions in the Chamber. The Government are committed to improving the efficient delivery of public services and bringing government closer to the people, in particular by rationalising back office functions, working across administrative boundaries, improving the interface between the Government and citizens through new technology, and slimming down estates.
	However, I must tell my right hon. Friend that in Lanarkshire, the Department for Work and Pensions is planning to deliver operations from 10 sites, with varying levels of service. The Jobcentre Plus facility that serves Coatbridge would become a benefit processing site, which would end the current standard of service delivery to my constituents. Coatbridge is at the centre, or heart, of surrounding communities, and has a population of approximately 50,000. Irrespective of where my constituents live, they visit the local town centre, and can make use of a full range of public services, including health, housing and the Department for Work and Pensions, as well as carrying out their weekly shopping.
	Frankly, it is unacceptable that Coatbridge should be treated unfavourably in comparison with other towns in Lanarkshire. DWP officials, and my right hon. Friend the Minister for Work, know my views and my opposition to the current proposals. I remind my right hon. Friend the Secretary of State that the matter simply will not go away, because it is an injustice for my constituency.

Michael Connarty: I was born in Coatbridge, so I know that it is a large community, but does my right hon. Friend accept that in small communities such as Bo'ness in my constituency, the number of footfalls in the town centre is just as vital to the shops as it is in a large town? To remove a service such as a jobcentre contradicts the Government's declared intention of bringing the service closer to the people.

Tom Clarke: I take my hon. Friend's point, but in view of the time, if he will forgive me I shall turn to another major issue that impacts on my constituency, and which Opposition Members may welcome my raisingroad haulage.
	Earlier this month I received representations from the Road Haulage Association. Ms Glancey and Mr. Fraser visited my office and put their case with great clarity and firmness. They argued that the UK is the only country in the European Union to charge more tax on diesel than on petrol. Every time the price of diesel increases by 1p a litre it adds an average of 800 to the annual cost of running a heavy goods vehicle. They therefore want the Chancellor to abandon further increases in fuel dutyan increase was postponed from September to Novemberand introduce a temporary fuel duty de-escalator for diesel. Oil revenue income could be used to reduce the duty and compensate for the rising cost of fuel, the process being triggered when world prices exceed $50 a barrel.
	I have already written to the Chancellor about the issue. Tomorrow we will learn in the pre-Budget report what he proposes to do about it and other critical matters. I expect that he will listen extremely carefully to representations, and will have something interesting to say. In that spirit, I congratulate the Government on the Queen's Speech. I welcome their proposals, which reflect reality in my constituency and beyond. They will help to build a progressive consensus, which is welcome in Scotland, throughout Britain and, I am sure, in Europe too.

Gregory Campbell: In addressing the subject of the Queen's Speech and the economy, I shall dwell on a number of topics. In Northern Ireland over recent years it has been argued that if the economy were made more robust and there were significant investment, it would ensure that in areas where paramilitary groups have a vice-like grip on working class communities, their grip would be broken. I do not subscribe to that theory and have consistently warned against it. However, if that grip can be brokenand we hope that it can bethere is no doubt that a vibrant economy based on a peaceful democratic economic regime would assist local communities to build themselves and improve their local infrastructure. The Government should ensure that that can happen.
	I shall return to the proposition that has been discussed in recent days with the Secretary of State for Northern Ireland. There has been much media speculation in Northern Ireland in recent weeks about a regeneration fund. I know that discussions have taken place between the Treasury and the Northern Ireland Office, and my party and others have engaged in discussions in an effort to establish such a fund. It has been termed a peace fund. The term peace has been devalued in Northern Ireland down the years, because of overuse and because it has been applied when anything but peace existed, so I prefer to speak of a regeneration fund. Whatever it is called, it is important that the economy in Northern Ireland should receive as much assistance as it can.
	The Northern Ireland economy has been suppressed for 35 years, principally because of the ongoing regime of violence and terror, the remnants of which we are still dealing with. Compared with the rest of the United Kingdom, salaries are lower than average, we have higher power and electricity prices, we have much worse deprivation levels and, correspondingly, we have significantly worse health and mortality rates across the population. It is essential that the regeneration fund is targeted at alleviating those problems.

Rob Marris: UK central Government funding per capita is already considerably higher in the Province. In round terms, 40 per cent. of the UK economy is the Government. In Northern Ireland the figure is 60 per cent.that is, 50 per cent. higher. How much more money does the hon. Gentleman want?

Gregory Campbell: The hon. Gentleman obviously was not listening when I outlined some of the reasons why there is such deprivation in Northern Ireland. If other parts of the United Kingdom had been fighting a terrorist war for 35 years, they might well suffer in similar ways. Through the establishment of a regeneration fund, we are endeavouring to make the Northern Ireland economy lessnot moredependent on the public sector. If we get the type of funding that we are looking for, we can ensure that the private sector becomes much more active in Northern Ireland than it has been heretofore.
	For example, tourism is one area in which we can make significant progress in a short time. Other parts of the United Kingdom have greater levels of tourism and experience higher spending per head of population. Again, that is because we are still coming to terms with the aftermath of 35 years of violence, but we hope that violence will come to an end. If we see a definitive end to violence, the tourism sector can take off in a few short years.
	We have a magnificent product to sell. I represent one of the most beautiful coastlines in Northern Ireland. The principal resorts of Portrush, Portstewart and Downhill can take advantage of a significant influx of tourists, provided we have not only the product, but the marketing and expertise to drive up the spend and ensure that the number of people purchasing the product increases.
	The other issue is the problems that have beset the manufacturing sector, which are not peculiar to Northern Ireland but have afflicted communities across the United Kingdom. The manufacturing sector in Northern Ireland has experienced a particular downturn. I concur with many of the comments made by the hon. Member for Hertford and Stortford (Mr. Prisk) about small and medium-sized enterprises. If our economy gets a significant boost in the next few years, we can significantly increase the SME sector, which could take off as it has not done in the past.
	The Government have funded Invest Northern Ireland, the agency responsible for delivering economic development, to a considerable degree in the two and a half years since its establishmentbut many of us are still not impressed by Invest Northern Ireland's results. The economy in Northern Ireland has become more buoyant, as has the economy across the United Kingdom, but I have tabled numerous written questions to try to establish how effective Invest Northern Ireland is at driving potential inward investors beyond the Greater Belfast area. Unfortunately, the answers have been minimal. It appears to many people in Northern Ireland that the body responsible for promoting the economy has a capital city mentality. Invest Northern Ireland does not get out beyond the motorway, and we must try to ensure that it does. It must address that point.
	The Chancellor of the Exchequer could address this issue, and I have written to him on several occasions to try to get him to do so. In Northern Ireland, as in many other parts of the UK, the black economy is prevalent. Other hon. Members and I have lobbied for a significant increase in personal allowances. If, for example, personal allowances and the threshold at which individuals begin to pay national insurance were raised to 10,000 per annum, it would no longer be productive for any small employer to pay someone who is in the black economy and consistently draws benefits.
	That would apply particularly to part-time employment. The part-time economy in Northern Ireland is buoyant, but if the black economy is prevalent, it is a drain on the social security budget. I hope that the Chancellor will reconsider the issue and raise personal allowances significantly above the rate of inflation. If we had, for example, that 10,000 per annum limit, part-time employees could earn 200 per week and pay no income tax or national insurance, and that would reduce the amount of regulation for small employers with such employees.

Martin O'Neill: I am listening to the hon. Gentleman with interest, but there is a certain inconsistency in his argument. He suggests radical changes in revenue raising, but equally wants large lumps of public expenditure to be devoted to one of the most disadvantaged parts of Britain. That equation does not work out. We have to increase revenue in order to have the resources to increase expenditure; otherwise we will end up like Bush's America, and that is not what we are after.

Gregory Campbell: I thank the hon. Gentleman. I shall return briefly to the issue that I was attempting to address. We are, I hope, emerging from 35 years of murder and violence, during which our economy has been depressed and resources that should have gone into our infrastructural capacity have been channelled and sidelined into fighting the war on terror. If those resources can be channelled into the infrastructuretourism and so onmany of us believe that that will of itself help to regenerate the private sector economy and make us less dependent on the resources that we get from the block grant.
	I shall conclude by asking the Government to deal with the problem of financial institutions. Last month I tabled an early-day motion on the availability of free cash machinesATMsacross the United Kingdom. The fact that that EDM received the most signatures of any tabled in the past three years by a Northern Ireland Member of Parliament reflects the great level of concern. In the past six weeks, Nationwide building society has issued a report that concluded that UK financial institutions were charging personal account-holders 60 million to access their own money through ATMs. That is a disgrace. The Government should pressurise those financial institutions to display their charges clearly on ATMs to ensure that people, particularly in poor deprived areas, understand that they are being charged 1 or 1.50 to access their own money, even though in many cases they are taking out only 10 or 15.

Angela Eagle: The hon. Gentleman raises a point that increasingly worries many of us as we see the development of cash machines that charge people to access their money, especially in poorer areas where they do not have the option of getting it in other ways. Does he realise that the Treasury Committee is soon to consider that, and hopes to come up with some views to pass on to the Government about what can be done about this serious and increasing problem?

Gregory Campbell: I thank the hon. Lady. I noticed that the Committee made that announcement just after I tabled the EDM; I do not know whether the two things were connected. I heartily recommend that hon. Members sign early-day motion 93, and if the Treasury Committee advocates strong, positive and decisive action in respect of the financial institutions, many of which make hundreds of millions of pounds, in order to assist people in deprived areas, it will be doing a service.

James Plaskitt: I am pleased to follow the hon. Member for East Londonderry (Mr. Campbell) and I endorse the points that he made towards the end of his contribution about charging machines. I shall speak about that subject later.
	I welcome the measures announced in the Queen's Speech that relate to economic affairs, especially the Government's commitment to introduce a consumer credit Bill. I endorse the comments of other hon. Members, including my right hon. Friend the Member for Dumbarton (Mr. McFall), who chairs the Select Committee on the Treasury. We hope that the Bill will implement many of our Committee's recommendations on consumer credit. I also agree with my right hon. Friend that the matter is urgent. I hope that the measure will be introduced soon so that Parliament can begin work on it.
	The Bill is important because existing consumer credit laws are approximately 30 years old. As the Government rightly stated in the White Paper, Fair, Clear and Competitive, which was published last year, the need to overhaul consumer credit legislation has become pressing. I am pleased that Conservative and Liberal Democrat Members have so far made broadly positive noises about the Bill. I hope that there will be broad consensus for our reform of consumer credit legislation.
	The need for reform is underlined by the dramatic change in the world of credit since existing credit laws and regulations were written. When the initial legislation was introduced, I believe that only one credit card was in circulation, whereas there are now more than 500. The range of credit facilities is phenomenally greater. The complexity of the marketplace that offers credit bears no resemblance to the simple world that existed when the laws were introduced. Access to many different forms of credit is far easier. It is therefore vital to bring the laws that govern credit up to date .
	Indebtedness is another reason for dealing with credit. The subject has already surfaced in the debate and attention has focused on the fact that total household indebtedness in the UK has passed the 1 trillion mark. The right hon. Member for West Dorset (Mr. Letwin) commented on that. There is no need to get over-excited about the 1 trillion figure. Although it is a new high, it reflects 10 years of growth in the economy and the rise in disposable income. Before becoming too concerned, it is important to stress the balancing figure in the other column, which covers total household assets and wealth. That figure is 6 trillion. The relationship between one and six is reasonably stable and does not suggest an overall problem of indebtedness in the economy. However, in specific sectors and groups of society, there are problems. Some are due to weaknesses in consumer credit legislation. We need to deal with that.

Richard Allan: Does the hon. Gentleman agree that it would be helpful to try to clarify responsibility for credit card fraud, especially card-not-present fraud, before it becomes a major crisis? People are not sure who is responsible once fraud has happened, and disputes between the financial institutions are increasing.

James Plaskitt: The hon. Gentleman is right, and I am right to suggest that there is a growing consensus about such issues. I am happy to endorse his comments. Later, I shall consider other fraud issues, which are also the product of the market's evolution in recent years and underline the need to tackle the matter.
	Many more people have access to credit as provision has grown so fast in recent decades. There are important imperfections in the credit market, and that is another reason to review the legislation. Choice and competition in the credit market and product innovation are all fineno one would have a problem with that. They drive the market and make it so successful. However, with those things have come other consequences that Parliament needs to address. There is far more complication and a great deal of consumer confusion in this market, as well as opaqueness in terms of the consumer trying to understand what the product is or what will be the consequences of taking a particular form of credit.
	That creates confusion for the average customermany of us would include ourselves in that categorybut things become far worse for the vulnerable consumer and move on from confusion to potential entrapment in a downward spiral of debt, which can lead to tragic personal consequences, as we have seen in recent years. Reform of the law is needed to realign credit legislation with the real nature of today's credit market.
	Credit is very important to the economy, as it aids personal flexibility, helps us all in managing our personal finances and creates more opportunity than there would be without it, but we can improve the working of the credit market and support all its benefits while eradicating some of its excesses and bad practices, which we in the Treasury Committee have been studying and becoming increasingly concerned about.
	The new Bill, when we have it in front of us, must achieve a number of important balancing acts. Yes, we need a genuinely competitive market in consumer credit, but to have it we need informed consumers. Yes, we want fair competition to be promoted and encouraged, but that requires an end to misleading promotions. Yes, it is important to achieve transparency in trading in credit, but that requires an end to the obfuscation that distorts so much of the market. We must have fair trading in credit and between credit providers and credit consumers. That means an end to many of the practices that constitute irresponsible lending.
	To focus on an important issue, the market falls well short of being genuinely transparent. The credit terms that come with most credit cards are printed in minuscule type and written in the most opaque language that it is possible to envisage. It is very hard for the average consumer to understandif they can even see them to read themthe terms of the contract that they have entered into.
	Also, it is impossible to compute the cost of credit. One thing that we on the Treasury Committee discovered in considering the issue is that an average consumer who takes two, three or four credit cards from different issuers, all with the same annual percentage rate, assumes that the cash cost of credit on those cards is the same. It is not. Hidden away in the small print are so many other variables that a person can do the same transaction over the same period on those four cards, all at the same APR, and the cash cost of the credit might vary by as much as 40 per cent. It is very difficult for consumers to keep up with all that. There are even different ways of calculating APR. That, too, adds to the lack of transparency.
	There is some progress in the industryI hope that some of it is due to the work that we have done in the Treasury Committeeas it is moving towards a standardised APR, which I welcome. The industry is also introducing summary boxes, which summarise the key information on the credit, the offers and the statement. That is movement in the right direction, but it has been rather grudging and there is still a lot further for the industry to go.
	I see those as down-payments on the complete reform that is needed. The summary boxes are not yet standardised, so it is still difficult to compare providers. The penalty charges that attach to the cards are still not clear and they represent a large part of the spiralling cost incurred by those whose debt goes out of control.
	The point that we must try to reach when we reform the consumer credit legislation is that the full extent of the deal into which the consumer has entered must be on the table before the consumer signs up. The problem at the moment is that far too much is discovered after entering into the contract. That is the key change that we need to make if we are really to achieve proper transparency in the industry.
	I hope that the Bill gives us a chance to achieve fair trading in the industry. We have found far too many examples of where that does not exist. I want to stress one, and one only: the unsolicited issuing of credit card cheques. These are being sent repeatedly to 5 million households in Britain, all of them unsolicited. They come with glossy accompanying promotional literature. Many of the banks that issue those credit card cheques encourage people, as they send them, to spend them on holidays, cars, gifts for other people, or credit transfers to yet another credit card. There is always room, it seems, to print on the cheques themselves and the promotional literature all the things that they can be spent on, but there never seems to be room to print the APR, the actual credit cost, what will happen if one only makes minimum payments and so on. There can only be one justification from the industry's point of viewit is an inducement to the consumer to use up more and more of their credit limit.
	I have put the question to many providers of credit card cheques when they have appeared before our Committee: what is the justification for unsolicited issuing of credit card cheques? Answers come back along the following lines: credit card cheques provide convenience to consumers; they cover instances of payment when one cannot pay with a credit card or bank cheque; or they are helpful for balance transfers. All those are reasons for having credit card cheques as part of the credit business, but not one of them is a reason for the unsolicited issuing of credit card cheques. They are delivered repeatedly only because providers hope that they will land on the doormat on the same day as a glossy holiday brochure, and consumers will simply find it irresistible, put two and two together, and end up paying six for the privilege. It is simply an irresponsible extension of credit.
	There is quite a simple answer. The industry can make the argument for the existence of credit card chequesI have no problem with thatbut the consumer should opt in to them, not have to face repeated issuing of them when they are not requested and not used. In the White Paper, Fair, Clear and Competitive, to which I referred earlier, it is suggested that the unsolicited issuing of credit card cheques could or may be one of the instances of irresponsible lending. I would suggest that it is an irresponsible form of lending. There is no justification for it, and I hope that we will use the opportunity of the forthcoming Bill to end the practice of the unsolicited issuing of credit card cheques.
	I also hope that when we consider the Bill in more detail, we can deal with the excessive interest rate problem in relation to store cardscredit cards issued by retailers. I can describe such interest rates as excessive, but it is not my description. When the Select Committee had the bosses of the four main banks in front of us, we asked them what they thought constituted an excessive rate of interest. The head of Barclays was unwilling to define it, but the others couldthey put it in the region of 20 per cent. or more, against the backdrop of current base rates. Most of the interest rates charged by store cards are well in excess of that, so we can describe them as excessivethey are condemned as excessive by the industry itself, not just by consumer associations.
	There are 21 million store cards in circulation, 5 billion a year is spent on them, 14 million adults have them, but they all charge excessive interest rates. I hope that we will have an opportunity, in consideration of the Bill, to do something about that, and to act on conclusions already reached by the Office of Fair Trading, whose report stated that
	the level of interest rates on store cards does not appear to be disciplined by competitive pressures.
	We must move to a genuinely competitive market, and if we do we should see an end to excessive interest rates on store cards.
	I want to pick up on the observations made by the hon. Member for East Londonderry about charging automated teller machines. That issue will also be examined by the Committee, and it is another area in which it is important to review regulations on money and credit. There is an explosive growth of charging ATMs. There are 20,000 of them around the United Kingdom, and they grew by 40 per cent. last year. Of the 5,600 new cash machines installed across the UK last year, 63 per cent. were charging machines. We are nearing the point at which there will be more charging machines than free machines, because some banks are selling their networks to charging operators. This means that we are paying for our own money.
	The industry argues that it is all about convenience. It says that in remote areas, if there were no charging machine there would be no machine. That is not a convincing argument. Many charging machines are in areas that could not possibly be described as convenience locations. In Leicester square, for instance, there is a Travelex charging machine, which does not warn people that they will have to pay but tells them that they will have to do so only after they have completed five screen actions. On the other side of the square, there are free cash machines. That constitutes a total lack of transparency, and it is a further reason for my hope that the consumer credit Bill will deliver a transparent industry.
	There is an urgent need for Parliament to consider this issue. We need an opportunity to lend a hand to the millions of consumers in Britain who are wrestling with the complex, obscure and frequently misleading world of credit.

Richard Allan: I have a great deal of sympathy with what was said by the hon. Members for East Londonderry (Mr. Campbell) and for Warwick and Leamington (Mr. Plaskitt) about consumer protection in the context of financial services. Howeverunsurprisingly, perhapsI want to talk about the role of information technology in the UK economy, a subject on which Cicero and Demosthenes did not regularly speak.
	For a number of reasons, IT is now centre stage in the political debate. It is no longer an issue on the fringes for the anoraks to talk about; it is something that we all need to consider. The Chancellor emphasised its centrality when he told us that he had already factored into his public spending plans the Gershon review savings, many of which depend on the success or otherwise of IT projects.
	Government affects the sector as a whole because about half all IT spending in the UK is now made by the public sector. As Government spending plans depend increasingly on efficiency gains that themselves depend on IT, the expenditure is being ramped up. Sadly, the track record of Governments of all colours in procuring and implementing systems has been characterised by problems that we regularly examine on the Public Accounts Committee.
	Many of the mistakes that we see continue to be repeated, and this year's programme contains a huge amount of new IT risk. Both the identity card system and the Inland Revenue and Customs and Excise merger will be very IT-intensive. Major contracts from earlier years will also be of interest this year, notably the national health service's national IT programme, the large-scale outsourcing for the Department for Environment, Food and Rural Affairs, which has already been awarded, and the 4 billion infrastructure project for the Ministry of Defence, which is due to be awarded early in the new year.
	The record of problems that should form a background to our consideration has come to the fore in recent weeks with the failure to implement the Child Support Agency system effectively, and the desktop system crash at the Department for Work and Pensions, which was truly spectacular in technical terms. It takes real skill to bring down 60,000 work stations. Normally, servers are the problem; one machine is killed, and no one else can gain access. These people managed to kill 60,000 machines simultaneously, which deserves respect from a technical if not an operational point of view.
	Stories of IT failures have been well rehearsed both in Committees and here, and I would rather spend my time suggesting solutions that I believe would produce a credible Government IT strategy on which we could pin spending plans with a degree of expectation of actually being able to meet them. I characterise them as people, practices and purposes. IT problems often lie not in the detail of the technology, but in the people, practices and purposes that surround it. Let us begin with purposes, sometimes described as requirements or specifications. We should view it in a broader context, and start by asking what any system is for. Far too often we do not look at the context of what we are trying to achieve in the wider world, but simply mechanise existing systems.
	One example of our losing track of the wider world is the tax credit system. Like me, other Members doubtless get regular visits from constituents who complain that they have been overpaid tax credits and are now being asked to pay them back. The system works; it correctly calculates that such people have been overpaid, informs themin a way that is completely unintelligible to me, and certainly to themand then seeks to reclaim the money. In doing so, it loses track of the wider point that we are giving these people money in the first place because they are on low incomes, so our ability to reclaim it is bound to be limited. The purpose of delivering money to people on low incomes has been lost in the process of creating a system that works well at a technical levelit does not lose the Treasury's moneybut which does not deliver what the customer actually needs.

Robert Smith: My hon. Friend is making a valuable point about the impact on people with low incomes. Just today, a constituent got in touch with my office to explain how their problem was dealt with. They phoned the helpline, but the system is so chaotic that it told my constituent to write to their MP because there is nothing that it can do.

Richard Allan: I have had precisely the same experience; people have come to my surgery to point out that they have been given exactly the same advice. Such incidents show that, in the broader context, the system is not working, irrespective of whether the technology is doing what it is supposed to do. These are the issues that we need to debate. Another example is the huge electronic medical records programme that the national health service is introducing.

David Willetts: I am listening to the hon. Gentleman with great interest. Before he leaves the subject of tax credits, may I ask whether he will join me in congratulating the Secretary of State for Work and Pensions on insisting that claims made by people in receipt of income support will not be handed over to the child tax credit system? The decision has been delayed yet again, and it is clear that the Department for Work and Pensions is not confident that those on the lowest incomes would get the money that they need if they were handed over to that system. Long may the Secretary of State carry on battling in favour of long-established benefits and against this scheme, which is still so unreliable.

Richard Allan: The hon. Gentleman makes the point very effectively. I agree entirely that if there were clear evidence that a particular programme would cause distress, we should not proceed with it simply because it had been started and a target date set. I am at one with the hon. Gentleman on the decision that has been taken.

Paul Tyler: rose

Richard Allan: The subject of tax credits appears to be a minefield. I give way to my hon. Friend.

Paul Tyler: I am grateful and I shall be brief. Does my hon. Friend agree that this issue is very relevant in the light of the Chancellor's intention to remove many people from the various Departments, and of the recent strike action taken by professional civil servants affected?

Richard Allan: I have an enormous amount of sympathy with my hon. Friend's observation. As our surgery experience shows, many such changes are based on a business plan that involves getting rid of lots of people, but which does not recognise that, in the early months of its implementationbut hopefully not in the long termmore people are needed to deal with teething troubles. Otherwise, a huge backlog develops. Existing queries cannot be answered and more queries arise, leading to a cycle of difficulty. Sadly, that is what is happening with certain aspects of the tax credit system.
	The NHS IT programme will be another major issue for debate in this House. To my mind, the purpose of that electronic medical records system is to improve patient health by ensuring that information is available to support clinical decisions. Its purpose is not to create electronic records per se, which would have no value except where they lead, directly or indirectly, to patient benefit. Again, we should think about such systems in terms of what they are trying to achieve for the public, rather than as the simple creation of electronic records. We frequently fail to debate such issues in that way.
	The shifting of purposes should always be a clear warning of potential problems, and in my viewit will not be shared throughout the Houseidentity cards are a case in point. Whatever the merits of ID cards and the associated politics, they are certainly an example of shifting purposes. Initially, they were wanted for their own sake, but since then we have gathered up an ill-defined set of functionspreventing illegal working, national security, access to NHS servicesand tacked them on. To me, that rings very loud bells as regards whether the system will work. I cannot see it as having a clearly defined purpose. We could have a separate debate about whether it would meet those requirements, which seem to be hazy.

Michael Fabricant: I am grateful to the hon. Gentleman for giving way. If I may say so, it is one anorak giving way to another. Does he agree that the gateway system introduced by the Government is another problem? The whole point of having a gateway review is that a project should not go ahead until gateway zero has been initiated, yet quite oftenthe hon. Gentleman mentioned the NHS as an examplewe enter gateway three a long time after gateways one and two have been ignored.

Richard Allan: In the case of ID cards, we know that the scheme has been through the first gateway, as the general feasibility has been looked at. One of the problems that the House will face is that, after public money has been spent and the best Treasury brains in the Office of Government Commerce have been applied to the project, we will not be able to see the outcome. We will have to debate ID cards in the knowledge that a report into feasibility has been drawn up, but is unavailable to us. I know that the hon. Member for South Norfolk (Mr. Bacon) is working on the task of gaining access to the gateway reviews. After all, we are taking decisions about spending public money, so the information should be made available to us.
	Gateway reviews are one of the practices that should be followed. Many have been dealt with in National Audit Office and Public Accounts Committee reports and, to be fair to the Government, there are some signs of hope in the work of the Office of Government Commerce and, indeed, of some Departments improving their game. I believe that we should compliment Departments when they start to get things right, but there are still clouds on the horizon, especially in the apparent lack of competition in the market, which leads to companies that have failed in one area still picking up lucrative contracts from other Departments.
	It is an easy target, but Electronic Data Systems is often singled out for its problems with tax credit systems, Child Support Agency systems and high-profile incidents such as what happened last week at the Department for Work and Pensions, a story that writes itself. Yet EDS remains a major partner and one of only two consortiums remaining for the 4 billion defence information infrastructure project that will be awarded next year. Understandably, people ask how we can end up with failure being rewarded by the award of another contract.
	Only in very few cases have contractors been written out altogether; Accenture, in its old guise of Andersen, was prevented from bidding for Government contracts for a while after a national insurance record system cock-up. Generally, we see the same faces coming back. The problem is not with individual companies. The problem is systemic, because contracts are geared in such a way that smaller innovative companies simply cannot get in. They can find no way in and tell us daily of their difficulties in obtaining Government work. The contracts, tender documents and costs of bidding prevent those companies from bidding for that work, even though they could demonstrate better value for money.

Rob Marris: Is the hon. Gentleman aware that the Child Support Agency in Australia, on which the UK CSA is based, got its computer system to work only by getting rid of the external supplier and taking the computerisation in-house?

Richard Allan: The hon. Gentleman makes an interesting point. We have already, quite rightly, done away with the private finance initiative for IT projects, but the level of in-house expertise, which I am coming on to now, is critical to getting these projects right. We have, sadly, developed a culture of tolerating failure in software development, which is simply not necessary. There are voices calling for proper software engineering principles to be applied, as mentioned in a very good report produced by the Royal Academy of Engineering and the British Computer Society. We should listen to what is being said. Correctly engineered software does not have to cost more than buggy software, yet there is a sort of lazy assumption out there that these things simply have to go wrong. That is not true. The engineering principles are there; the problem is that they are not being applied.
	Improvements to Government performance could be made by instilling these disciplines in departmental IT centres of excellence. If we are to have IT centres of excellence, let us ensure that they are truly excellent and that they do not adopt some of the lazy practices offered by suppliers over the years. They must secure best practice rather than state of the art. State of the art is terrible; they need something better than that. We should use information architects, which is an important recommendation in the Royal Academy of Engineering report, and we should have requirement specialists to get the designs right from the beginning. We need to ensure that a broader range of companies is able to bid into the public sector market.
	The most important, and often the most neglected, element of any IT project is the people. IndustryBritish Gas, BT and othershas learned to look at such projects as business change projects, rather than as technology projects. They are not about technology but about changing the business, with technology as a large element of that change. An example of how far the public sector is from that attitude is the national programme for NHS IT. The technology procurement appears robustI am sure that Richard Granger's team will have bought some good technologybut the people have been left so far behind that the technical press, and even the more general press, are full of stories of clinicians in the NHS who are fighting the very programme that is supposed to assist them in their work. The project is getting the people side desperately wrong. If anything brings down the programme and leads to significant wastage of the 6 billion committed to it, it is likely to be on the people side, not the technology side.
	We must ensure that the NHS now gives priority to working with its staff to implement the new IT systems and puts money into training. The NHS must ensure that it has in-house expertise so that people can use the systems and derive maximum benefit, rather than leaving the matter to external contractors.
	The Government can improve their IT procurement, to the benefit of the public purse and, most importantly, the users of the services, if the will is there. The Government can do more to create a climate in which the UK IT sector can flourish to the benefit of the economy as a whole; the pointers to what needs doing are already there. Ofcom should be robust in promoting a competitive telecoms market and can expect a lively year ahead as it grapples with some of the more difficult issues of telecoms competition that have been left to ride over several years. The Government can respond urgently to the e-skills UK report, IT Insights, which highlights the improvements needed in work force training. Other hon. Members have mentioned our competitiveness with China and India, but the report tells us what problems we will have if we do not address the issue of skills, all the way up to chief executive and ministerial level. We need IT skills across the work force if we are to be able to make correct and informed decisions.
	We need to ensure that we continue to review our support for research and development in technology to ensure that it is genuinely additional and efficiently delivered, without the complexity that often makes it inaccessible to the very companies that would most benefit from it. Such companies often say that they cannot make their way through the bureaucracy to access the funds that are supposed to be available to support innovation, or that they have to employ an extra layer of specialists to do so for them.
	I am not in the camp of those Jeremiahs who wish to see the Government fail in their objectives. That is especially so in the case of the improvement of public services through new technology. Indeed, I am desperately keen that the Government should succeed in that agenda. It is not in anyone's interests that such projects should continue to fail. It is a high-risk agenda, but not an impossible one. I hope that the Government will continue to learn the lessons. The Liberal Democrats believe that our approach to the issue is credible. We could achieve savings through the use of new technology, but it is incumbent on all parties who put forward a cost-saving agenda for the public sector to demonstrate that they have the credibility, have learned the lessons and will deliver.

Harry Cohen: I shall not follow the hon. Member for Sheffield, Hallam (Mr. Allan) on the subject of IT in public services, although he made some good points about greater competition. The Government have to be clear about what they want from such contracts and there should be penalties for failure as well as rich rewards.
	I welcome the programme of new legislation for next year that was announced in the Queen's Speech, including the 37 Billssome of which are complex and importantthe Chancellor's financial proposals in his pre-Budget report tomorrow, and the commitments in Labour's election manifesto, when it is published. The one thing that cannot be said about this Government is that they have run out of steam. They have plenty of ideas for improving society and the lives of our people.
	I want to address one issue that the Government will have to address more fully in the next yearpension reform. I shall indicate some components of such reform that I think would achieve the most favourable outcome for the many, not just the few.
	First, I shall give the House two recent examples that show pension schemes in a mess. On 19 November, under the headline, APW staff furious as loophole threatens pensions, The Independent reported:
	More than 1,000 former and current workers at APWthe UK electronics manufacturer, which announced the winding-up of its pension scheme yesterdayare set to lose up to 80 per cent. of their retirement savings . . . The wind-up is the second such case this week, after Henlys, the bus group, left more than 2,000 workers in jeopardy when it announced that it would be winding up its pension scheme . . . Despite a fortnight of debate over the final structure of the privately funded Pensions Protection Fund and the Government-backed Financial Assistance Scheme, members of the APW and Henlys schemes are still set to fall outside the requirements to qualify for either lifeboat.
	That is appalling, although I pay tribute to the Government for bringing in the pension protection fund and the financial assistance scheme.
	Another report in the same paper on the same day was headed, Royal Mail warns it must double pension contributions, and disclosed a scandal that is repeated in many other companies. The report stated that
	for the previous 13 years, Royal Mail had taken a pension holiday, making no contributions at all.
	The fact that companies and employers can do that is an enormous flaw in the current system, especially as the report went on to note:
	However, the organisation's top management . . . stand to collect millions of pounds in performance bonuses.
	Some people get their bonuses by not putting money into pension funds.
	Those are not isolated scandals; they are a flaw in the system, and not least in the Chancellor's approach of maintaining that his responsibility is the prudent management of public finances, which is laudable, while leaving the private sector largely to operate as it wants. Companies hold in trust, but are untrustworthy with, people's savings and workers' pensions.
	On pensions, the Chancellor has said:
	If the voluntary sector
	he meant the private sector
	doesn't work, we'll have to look beyond that.
	The examples I gave are among the many that show that the system does not work and that it is time for the Government to look beyond it.
	The Tories attacked the Chancellor for abolishing the tax dividend on pension funds. I refer to the Daily Politics Tory conference special on 6 October, when the presenter, Andrew Neil, questioned the hon. Member for Havant (Mr. Willetts), the Conservative spokesman on work and pensions. The hon. Gentleman had said in his speech to the conference that Labour's 5 billion per annum take from pension funds, by completing the abolition of the tax dividendby the way, that process started under the Torieswas
	the worst stealth tax of the lot.
	Andrew Neil asked him whether he would restore the money and the hon. Gentleman replied:
	We're not in a position to make that pledge. We're not making that pledge.
	Mr. Neil concluded:
	All right, so the 5 billion in tax stays.
	The Tory attack is thus somewhat feeble.
	The Chancellor is not out of the woods as far as I am concerned, however. On the Today programme on 27 September, he said that the 5 billion per annum taken out of pension funds was connected to rewarding investment, to give greater incentive for investment in the economy. He said that corporation tax had been cut by 3p and
	the result is that companies should be more profitable after taxes.
	That was not picked up at the time, as it was Labour's conference week and news moves fast, but in effect the Chancellor said that he had taken out of workers' pensions to put into company profits. That is not appropriate from a Labour Chancellor and he will have to arrange to put back that money, and a lot more, over the next period.
	I believe that there has to be dignity and well-being now for today's pensioners, and I praise the Government on their efforts on that. They were right to tackle the appalling legacy of pensioner poverty that they inherited from the last Tory Government. In 1997, 2.7 million pensioners were in poverty and expected to live on a total of just 69 a week. The poorest pensioners are now 1,800 a year better off and absolute pensioner poverty has been reduced by two thirds.
	Savings used to be harshly penalised by a reduction in benefits. The new pension credit has changed that. The setting up of the pension protection board, to help the workers in those firms that go broke and wind up their pension fund, is also a very welcome move by the Government. But there need to be decent pensions for people in the future, and to achieve that reform is needed.
	The recent interim report of the Pension Commission, chaired by Adair Turner, formerly of the CBI, said that a sustainable comprehensive approach was required for the long term. There are, it argued, four unavoidable choices for policy makers, at least one of which will have to be made. The first is that pensioners become poorer relative to the rest of society. The second is that taxes and/or national insurance contributions devoted to pensions will need to rise, or public spending on other services will need to be reduced, presumably to balance tax and national insurance. The third is that each generation will have to save more and be reliant on the next generation also saving more. The fourth is that retirement ages will have to rise. Without action on this, the report said,
	pensioners will on average suffer about a 30% decline in their incomes relative to average income between now and 2035.
	So doing nothing is not an option and the Government will have to start to address the issue in a realistic way from next year.
	I oppose raising the retirement age; I also favour a bigger basic state pension for every older person in this country. I would like the pension linked to earnings and to be free from means-testing. The Government's minimum income guarantee raised the incomes of the poorest among the elderly, but I have seen figures showing that the basic state pension is now just 15 per cent. of average earnings. In 1980, before Mrs. Thatcher abolished its link to earnings, it was 23 per cent., so in my view the Government have to raise the basic state pension.
	I favour a compulsory savings requirement upon all people to individual savings accounts, which cannot be accessed until retirement or, for a spouse, death. There should also be compulsion for employers to contribute at a proper level, higher than now. They should also lose the power to manage and, potentially, to raid their workers' pension fund. The Exchequer should insert an initial sum, like that proposed with the child bondwhich I very much favour, although the Liberals opposed itinto the individual savings accounts, and add a state contribution to extra private savings made, say a pound for every pound saved.
	There should also be an extra boost from the Exchequer for women's pensions. Many women lose out on their occupational pension because they undertake important but lower paid jobs and miss out for a long while in their working career due to the time that they take out to raise their children.
	I am not against Exchequer use of the private sector. It could use the private sector to manage the savings account sum in total, but managers' performances would need to be monitored and their contract terminated if their performance was inadequate.
	The Government would also need to address the impact of stock market fluctuations upon savings for retirement, perhaps by adopting a system whereby they inserted extra cash during bad times and took it back at times of stock market rises. It should be possible to do that consistently in this day and age.
	Effective robbery from pension savings by fat cat directors of finance companies who take excessive salaries and dividends for themselves, even when the savings that they are managing are underperforming, must be stopped. It is also time that the salaries, dividends and other payments that directors receive from companies, including their pensions, are published in annual accounts and not kept secret, as is often the case. I introduced a Bill to require that in the last Session and I hope that the Government will take up that point.
	Those are my basic components for pension reform, which I hope will be taken on board. Over the next year, I hope that the Government will be for the workers, not the bosses, and for the many, not the few.

Geoffrey Clifton-Brown: The Gracious Speech contains a massive number of Bills32 in all: thank goodness most of them will not see the light of day before the next general election.
	I cannot sum up the Queen's Speech any better than Anatole Kaletsky, who said that it is a rag-bag of unfortunate measures. It is one of the most illiberal Queen's Speeches for a long time. On identity cards, I walked past eight policemen this morning. That is the most I have seen in many towns in my constituency in the 12 years that I have been a Member of Parliament. Each one could have stopped me and asked for my identity card. Had they done so, I would have been late to make my speech. That shows what an ID card could do to the relationship between this country's citizens and the police.
	The Queen's Speech is set against a world environment in which two particularly important things have happened. One is the general situation in the middle east, which has severe consequences. It has led not only to a huge oil price spike but to a significant cost, both here and in the USA, of keeping our troops in Iraq. That, of course, has led to the special provision by the Chancellor. The second is the substantial decline of the dollar, which has now reached a rate of almost 50p. That is because other world uncertainties have led commentators and others to concentrate on the very large twin deficits in the States and here.
	The Chancellor has had an extremely lucky tenure since he has been at No. 11 because of the stable world environment. From what I said, it is clear that I believe that that might, sadly, become less stable. That will give him even greater problems in meeting his fiscal and monetary targets. In tribute to him, but in concert with many other central banks around the world, central banks have become much better at managing the macro-economy, injecting liquidity into an economy when it is needed, but also engaging in monetary tightening when economies are starting to overheat. That has led to a much more stable economic cycle.

Angela Eagle: I do not recognise the description of a stable world environment. We had the Asian contagion, which the British economy managed to work its way through because of our economic policies, and the aftermath of 9/11.

Geoffrey Clifton-Brown: My comments on the stability of central banks include the Chinese and other Asian central banks. In particular, the United States Federal Reserve and Alan Greenspan's work, and the Governor of the Bank of England, have led us to manage the macro-economy in a much more stable way. That has been helpful.
	The decline of the dollar will be important to both the American economy and our own and could well lead to a slowdown in world demand and growth. I hope that the same will not happen here, but there is no doubt that imports to the American economy will now be more expensive. America has been living on its huge fiscal deficit and on cheap imports, principally from China and India, but the US deficit and the huge Chinese economic surplus will have to be addressed in the not-too-distant future.

Peter Pike: Does the hon. Gentleman agree that one of this country's industries that operate in a dollar market is aerospace? A weak dollar could cause problems to the aerospace industry, which is important in my constituency in the north-west and in many other parts of the country.

Geoffrey Clifton-Brown: The hon. Gentleman is entirely right, but aerospace is not the only industry for which the weak dollar might cause difficultiesthere are several others. It is something that concerns us all. I hope that in the coming months the central banks of America and Europe will pay greater attention to the problem and see whether the dollar's further decline can be prevented.
	Under present policy, over the next Parliament taxes set by the Chancellor will rise to their highest level for 24 years. The UK public sector has undergone a period of dramatic expansion and taxes are now rising to pay for it. They will have to rise even further after the next election, to pay for the Chancellor's black hole. Many people predict that next year the fiscal deficit will rise massively to about 20 billionthe equivalent of 8p on income tax. My right hon. Friend the shadow Chancellor of the Exchequer has set up the James committee, of which the Gershon committeeto which, as usual, the Government gave very limited terms of referenceis a pale imitation. The James committee has real teeth and I understand that it has identified savings of approximately 20 billion. The message for the British people is simple: under the Chancellor's proposals, there will be a 20-billion black hole and their taxes are likely to go up by the equivalent of 8p on income tax; under my right hon. Friend's proposals, taxes will stay the same for the same level of public services. The choice at the next election will be clear.

Paul Farrelly: rose

Geoffrey Clifton-Brown: And the hon. Gentleman will now try to dispute that fact.

Paul Farrelly: How does the hon. Gentleman explain the fact that the ratio of what used to be called the Government deficit to the national debt now stands at 32.7 per cent., compared with the 43.6 per cent. ratio that Labour inherited in 1997?

Geoffrey Clifton-Brown: The difference is that we were at a different stage of the economic cycle. At that point, we were on a rising part of the cycle; the Chancellor is in difficulty because now we are on a declining part of the cycle. He will have great difficulty filling the black hole; the only way he can do it is by putting up taxes.
	In 200001, the Government were spending about 1 billion a day, whereas it is estimated that by 200607, they will be spending about 1.5 billion a daya 50 per cent. increase in public expenditure in five years. That is not sustainable, but even if it was, we would have to ask whether it is buying results. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) said, measured internationally, that is very inefficient public expenditure.
	I wish to mention specifically one or two stealth taxes that have crept in. The first was highlighted in a fairly sharp exchange about the savings ratio. One of the nasty stealth taxes that have appeared in the Government's fiscal policy is the measure to cut ISAs in 2006, so that ISAs in equities will be cut from 7,000 to 5,000 and ISAs in cash from 3,000 to 2,000. Given that some of our lowest tax payers derive great benefit from ISAs, that is a spiteful measure.
	The change by which Business Link will no longer be able to recover VAT will mean that millions of pounds that had been available to help small companies with tax and employment advice will go straight to the Chancellor. It is a small and mean-minded measure. Stephen Alambritis of the Federation of Small Businesses said in relation to this measure:
	We would be very concerned about any fall in overall revenue which would affect the efficiency and effectiveness of Business Link's operation.
	Surely we want to encourage the 3.5 million small businesses, about which my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) spoke so eloquently.
	There is also the disaster of pension credit, which was mentioned by the hon. Member for Leyton and Wanstead (Mr. Cohen), whom I am pleased to follow. Pension credit was introduced by the Department for Work and Pensions, which, incidentally, now has more employees than all our armed forces put together. Pension credit, introduced by the Department in October last year, guaranteed an income of 105.45 a week. That is good for anyone over 60. It guarantees 160.95 for couples. However, effectively it taxes savings of 6,000, which is only 120 a week, at more than 40 per cent. If the full indexation rules remain the samethe pensioners' withdrawal taxexperts estimate that as much as 80 per cent. of the pensioner population will eventually qualify for means-tested benefit. That is a situation that Mr. Adair Turner of the CBI has rightly described as unsustainable. It is wrong that pensioners who have a small amount of pension are taxed on that small amount and are often worse off, or no better off, than someone who has managed to organise their lives to claim the maximum amount of benefits. I know that my hon. Friends on the Opposition Front Bench have proposals to deal with this problem.

Mark Prisk: My hon. Friend is making an excellent point. Does he agree that there is also the human question for pensioners? Is it not humiliating for the oldest members of our community to have to give to strangers their personal financial details through this disgraceful process?

Geoffrey Clifton-Brown: My hon. Friend has eloquence when he speaks on behalf of small businesses and even more eloquence when it comes to clairvoyant powers. He has touched on exactly what I was about to say.
	The minimum income guarantee system, which was introduced by the Government, is an utter disgrace. Some of the poorest pensioners in the landabout 2 milliondo not get the full MIG because they are too proud, for one reason or another, to claim it. The basic state pension is only 70 a week. The difference between that and the MIG of 105 affects some of the poorest people who cannot afford properly to heat their house or to feed themselves. That is an utter disgrace. The proposal to link pensions to earnings to improve the lot of our poorest pensioners is greatly to be welcomed. I think that the British people will greatly welcome it too.

John Horam: My hon. Friend is bringing to the debate a welcome sense of realism about pensions and also a sense of despair among many pensioners. There is a looming crisis, for example, about the possible and uncertain ending of the traditional pension book in February next year. This will affect many very elderly pensioners who are infirm and fragile in their health. When the Government first mentioned this, they talked about an exception service. We have heard nothing about that for the past two years. I want a statement from the Government on this looming crisis in the very near future.

Geoffrey Clifton-Brown: My hon. Friend makes an excellent point. I have no doubt that my hon. Friend the Member for Havant (Mr. Willetts) will refer to the matter when he makes his winding-up speech. Indeed, he is nodding. This is an area where the Government, who claim to be the champion of some of the poorest people in the country, have failed our poorest pensioners. I put it as strongly as that because I believe that that is the case. Something needs to be done. I have no doubt that there will be a clear choice at the next election.
	I want to refer to what I call fiscal drag. It is the issue of not uprating allowances in line with inflation, let alone earnings. The example of property taxes is perhaps the most stark. I declare my interestit is in the Register of Members' Interestsas a fellow of the Royal Institution of Chartered Surveyors, so I do know a thing or two about property. It is a disgrace that the threshold for stamp duty is set at 60,000 when the average house price is 100,000. When the threshold was set, the average house pricemy hon. Friend the Member for Hertford and Stortford, who also knows a great deal about property will correct me if I am wrongwas 22,500. The ratio is therefore the wrong way round, and a huge number of low and middle earners with modestly valued houses will be caught by the tax for the first time. It is a tax on mobility, including job mobility, which we desperately need to maintain a competitive economy. That feeds through to the allowance for inheritance tax. If we uprate stamp duty to reflect the increase in house prices, we must also uprate the exemption for inheritance tax from 262,000 to about 300,000. That is a much more realistic allowance for inheritance tax.
	In his 2002 Budget, the Chancellor forecast net borrowing of 13 billion in 200304. A year later, he said that it would be 27 billion, but it turned out to be 35 billion, or 3.1 per cent. of gross domestic product. In his first tenureand I listened to him hour after hourhe said that he was providing prudence for a purpose. Goodness knows how often we heard those words. Prudence has now jumped out of the windowpoor Prudence has gone, never to be seen again by the Chancellor, who is now running the country into huge debt and does not know how he will get us out of it, except by taxing the people of this country more and more. The tax take has doubled in the past seven years, costing the average family 5,000 each. The British people have a stark choiceeither their taxes are increased significantly under another Labour Government, or they can have a Conservative Government who will hold taxes at the same rate, do their best to reduce them over the cycle, yet produce a better level of public services. The choice is clearI am sure that they will want to vote Conservative.

Angela Eagle: It is a pleasure to follow the hon. Member for Cotswold (Mr. Clifton-Brown), who is clearly drawing up battle lines for the election. I merely point him to the latest polls showing how people may vote in any election in the coming year.
	The themes of the Queen's Speech were clearly security and opportunity for all in a changing world. Before talking about opportunity, I congratulate the Chancellor on his economic record and the achievement of economic stability, which underpins all our subsequent policies as a Government and gives us the chance at long last to invest in and reform our sorely neglected public services, ensuring that we can create a fairer society with opportunity for many people who were left behind in the years of Conservative government. That economic stability has been achieved through political choices about, for example, the independence of the Bank of England and monetary policy, as well as a system of fiscal rules that have enabled us to steer a steady course through internationally choppy waters.
	Whatever the Opposition's motivation in attempting to paint a different picture, the economic facts are unchallengeable and need to be put on the record. We have had growth in every quarter for the past seven years, thus achieving the longest period of continuous growth for 200 years. We have had the longest period of low inflation and interest rates since the 1960s, and while the Government have been in office 2 million more jobs have been created. Unemployment is at its lowest for 29 years. In my constituency, there has been a 57 per cent. fall in unemployment, and youth unemployment has been wiped out. Those are the lowest ever figures for my constituency, and I will be proud to campaign on them when the time comes.
	Economic stability and growth have enabled sustained public sector investment in our schools and hospitals, child care, skills and the knowledge economy. For example, in Wirral borough, before a Labour Government were elected, capital investment in schools ranged from 1.5 million to 2 million a year. That has steadily risen to 18 million a year, and we have a transformed infrastructure in which our children can learn. In addition, there is a 55 million private finance initiative project that will deliver seven new schools.
	Many people would have thought that such a changed environment for my constituents was impossible when the Government came to power in 1997. It contrasts with our experience of 3 million unemployed, 1.5 million households in negative equity and constant cuts in public services, which was the Tory record. We have heard today of the 35 billion of cuts that are the Tory threat and their platform for the next election.
	I welcome many Bills in the Queen's Speech. I shall speak briefly about the consumer credit Bill. My hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) made an extremely good speech dealing with the details of the problem that must be confronted in the Bill, including the introduction of summary boxes to deal with confusing interest rates, misleading advertising and the proliferation of complex products with opaque and confusing prices, sometimes with extremely high rates of interest, which are not clear, and even higher rates of penalty charges, which can often drag modest borrowers into serious trouble. We have all had examples of that in our constituencies.

Peter Pike: I had an example of that this very week, with a constituent who took out a loan and has been ill. A reduced payment was agreed, but the interest payment is more than his monthly payment, and he now owes quite a lot more than he originally borrowed. Such a state of affairs is a disgrace.

Angela Eagle: Indeed. I hope that with the passage of the consumer credit Bill, we will ensure that such practices are brought to an end.
	I want to deal with the prospects for the future, now that we have the economic situation triumphantly right. With the basics in place, we have an opportunity to carry out more structural change and engender greater protection and fairness for all our citizens. I shall spend the next part of my speech talking about the realities of post-neo-classical endogenous growth theory. I refer to the opportunity and anti-discrimination Bills in the Queen's Speech. Translated into English, that high-falutin' economic phrase means that if people are happier and are treated more fairly, they will generally be more productive and work harder, and the economy will benefit. We should remember that and act on it.
	I am happy to see in the Queen's Speech a welcome package of reforms promoting protection from discrimination and exploitation for many people who are not properly protected at present. I have in mind the Disability Discrimination Bill and the equality Bill. I shall make a case for extending our activity to introduce what I call a single equality Bill updating the equality legislation that the joint commissions will be tasked with putting into effect.
	The Disability Discrimination Bill will help the 14,000 people in Wallasey who suffer from some form of disability, as it will help the 14,000 people, on average, in every constituency who struggle to manage with one form of disability or another. The Bill will complete the Government's manifesto commitment to legislate for full civil rights for disabled people and is to be welcomed for that. It will put in place an end date for transport to be made accessible. It will introduce a positive duty to promote equality, which will help to prevent much of the thoughtless discrimination against people with disabilities that we see around us. It will extend the scope of reasonable adjustment provisions to allow the many hundreds of thousands of disabled people who feel able and ready to work now, and the million or more who aspire to be able to work, practical access to the labour market to enable them to get on with their lives and contribute to both the wealth that we create in our society and their own personal fulfilment and development.
	The Disability Discrimination Bill will complete Labour's historic mission to introduce full civil rights, which was begun by Lord Morris of Manchester. The mission is currently being continued by one of the most talented Ministers in the Government, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), whom I have known quite well for most of my life.

Ian Stewart: All of it.

Angela Eagle: Yes, all of it.
	I want to discuss the equality Bill.

David Willetts: We all look back fondly to the time when the hon. Lady spoke on disability issues, or at least benefits, from the Front Bench. In his remarks earlier today, the Chancellor said that he will announce changes in the rules for incapacity benefit tomorrow. Can I take it that she supports those changes?

Angela Eagle: Clairvoyance has never been one of my talents, so I await tomorrow's announcement with interest.
	Many things can be done to help those who have been stuck on incapacity benefit to get back into the labour market and make their contribution. It is important that the Disability Discrimination Bill accompanies any effort in that direction, because it is no good expecting people with disabilities to be reasonable and try to get back into work if barriers in the workplace prevent them from doing so. We must sort out both sides of the equation. When the measures are unveiled, we can all judge whether they are practical and whether we support them.
	I welcome the equality Bill, which will put together the current commissions for disability, gender and race and add other duties in order to create a more user-friendly organisation. I welcome the idea that different types of discrimination are not in competition with one another. If we can get anti-discrimination work right in one area, it strengthens the argument for promoting it in another.
	I disagree with the Commission for Racial Equality's worries. A single commission for equality and human rights will strengthen the drive in our society to deal with some all-too-persistent discriminations, which are still around 30 years after some of the pioneering legislation in that area was put on the statute book.

Rob Marris: Does my hon. Friend share my disappointment that, having signed up to the Amsterdam treaty in 2000, it will take the UK Government until December 2006 to introduce age discrimination legislation, which will have taken six years to get on the statute book? The situation is ridiculous.

Angela Eagle: I am slightly more patient that my hon. Friend and am happy to see the Government getting on with it. On age discrimination, many knotty and thorny issues must be worked through, and the exemption until 2006 was implemented for a specific and good reason. However, I would like to see the work being done as quickly as possible as that date approaches.
	I particularly welcome the positive duty to promote equality on gender grounds in the equality Bill, because I had a ten-minute Bill on that subject not long ago. Although I am sure that the Government have been listening to me, I suspect that the process went on behind the scenes for quite a while.
	The Government have delivered on their commitment, which was made in 1999, and the legislation will help to shift the structure of our battles against discrimination in our society on to a preventive footing. The older legislation protects people and gives them compensation after they have been discriminated against. The new positive duties will prevent discrimination from happening in the first place and will enable us to create a cultureinitially in the public sector, and in due course in the private sectorof prevention, which will enable employees to know that they have rights, and employers to know that they have responsibilities to ensure that unthinking and illegal discrimination does not happen. I welcome that move.
	I welcome the equality Bill's extension to goods and services of protection on the grounds of religious belief. I should like that to include sexual orientation and age, which are the only two strands of employment protection that have not had goods and services protection extended to them. This important Bill will change the equality delivery infrastructure.
	The UK's existing anti-discrimination legislation needs to be updated, as it is inconsistent, piecemeal and complex. Since the enactment of the first such legislation by Harold Wilson's Labour Governmentthe formidable and fantastic Barbara Castle piloted it through this House more than 25 years agoit has developed into a package of 30 Acts, 38 statutory instruments, 11 codes of practice and 12 EC directives and recommendations. I am not surprised that even those employers who wish to do right find the increasingly complex and sometimes inconsistent regulations facing them to be a bit much. It is about time that we had a Bill to simplify, harmonise, consolidate and extend our legislation to make it much easier for employers and employees to comprehend.
	Unless that is done, the Government's plan to combine the three different commissions, welcome as it is, will be flawed. It is important that employers who wish to do right know exactly what is expected of them and that employees who are subject to unlawful discrimination realise that they have been discriminated against and know that they can have redress. It is even more important that employers and employees can work together to eliminate from the labour market and from the provision of goods or services any unlawful discrimination on the grounds of gender, race, religious belief, disability and, I hope very soon, sexual orientation and age. Then, as our economy develops in the choppy waters that our Chancellor has managed to navigate so well, we can make certain that opportunities that have not been available in practice in the past are opened up to all our citizens regardless of their gender, race, creed, colour, disability, age or sexual orientation.
	Extending and consolidating that approach will make our economy more efficient and enable us to use the undoubted skills and talents of our citizens, many of which are grossly underused, much more effectively. That will put us in a position to continue to make our way in the world and to enjoy the ever rising standards of living that we have experienced. It will also, crucially, help us to fight inequality, poverty and disadvantage, which we still find in all too many parts of our communities where discrimination has been suffered.
	With the Bills in this Queen's Speech, the continuing work to ensure that we preserve our economic stability and the equality Bill to consolidate anti-discrimination legislation, we truly look forward to a much fairer and more progressive future.

Peter Atkinson: I apologise to the House for my absence for a large proportion of the afternoon owing to another engagement, after being present for the opening speeches.
	The commitment of the hon. Member for Wallasey (Angela Eagle) to dealing with discrimination and to disability issues is undoubted and it is hard to disagree with much that she says. However, I would counsel that, although many of the initiatives are worthy and desirable, they have an impact on business, especially the operation of small businesses. That must be carefully considered and I shall say a little more about it later.
	I have heard the Chancellor make similar speeches on several occasions. Today, he simply made one of his typical speeches. He comes to the Chamber and is surrounded by Brownite Members. It is interesting to see who sits behind the Chancellor; we shall keep a little note of that. He approached the Dispatch Box with a fistful of press cuttings and extracts from broadcasts. He spoke for about 40 minutes and said little apart from reading comments that Conservative Members and Liberal Democrat Members had made to the newspapers. We witnessed a bit of a record today because, if I heard the right hon. Gentleman correctly, he quoted from the Lincolnshire Echo. He must have been scratching around for press cuttings to reach that level.
	As always with the Chancellor, what he did not say was notable. We expected some sort of trailer for tomorrow, but there was nothing. He said little, if anything, about pensions, almost nothing about borrowing and the attendant problems that he faces, and nothing about the golden rule. We are determined to hear what he has to say about that tomorrow but we expected him to give us a bit of a clue to what it is all about. If he had taken an intervention from me, I would have asked about the rules of the golden rule, which get more mysterious as the days pass.

Mark Prisk: Does my hon. Friend agree that the supposed golden rule has become a flexible tool? Is not it better described as a golden elastic band?

Peter Atkinson: That is a good point. Given that the Chancellor's borrowing requirement is predicated on the golden rule, he should give the House his interpretation of it. We think that we know when it started because the Treasury tells us that, but we do not know when it finishes because we do not know when the right hon. Gentleman believes that the economic cycle will finish. Will that happen in 200506 or next year? The Governor of the Bank of England more or less hinted that it could be in a few months. It is difficult for anyone to make a substantial judgment on our position and that of the Chancellor's borrowing requirements without knowing the basis for the golden rule.
	In 2002, the Chancellor predicted a borrowing requirement of 13 billion; a year later, he predicted a figure of 27 billion and now, if we are to believe PricewaterhouseCoopers and others, he predicts a borrowing requirement of 36 billion. That shows that he is on a rake's progress for borrowing. I hope that tomorrow will shed some light on the country's true financial state so that people can make decisions that affect their future.
	The Chancellor said little about pensions, whereas many hon. Members have said a lot about them. They constitute the big crisis that confronts the country. I do not need to rehearse all the comments about specific problems, but one of the Government's most shameful acts has been to reduce a world-class pension system to a third world pension system, leaving many people in serious doubt about their future.
	The boom in house prices is one result of the uncertainty about pensions. If people are faced with the prospect of their pension being of less value than they expected, the safe alternative is to pour money into bricks and mortar. That has driven up house prices recently as people have baled out of pension funds and gone into property. The consequent increase in interest rates becomes a serious problem for many people who have chosen that form of investment. Although there has been a softening in recent weeks and we have heard predictions that interest rates will not increase, it is alarming to read in the papers today that the Organisation for Economic Co-operation and Development believes that we should have four more interest rate rises in the near future. Other predictions are that interest rates should go beyond 5 per cent. next year. That is alarming news for many people who have invested in property.

Sally Keeble: If the hon. Gentleman thinks that mortgage interest rate predictions of 5 per cent. are alarming, what on earth did he think about the 15 per cent. rates under the Conservative Government?

Peter Atkinson: I agree that that is alarming, but the difference is in how interest rates go up. In earlier times, they were traditionally much higher and had been for many years, but they went down to 2.5 per cent. and have now doubled. That is a substantial jump in the calculation that people make and considering [Interruption] If the hon. Lady will let me finish, considering the sums that are invested in property compared with those invested a decade or so ago, it hurts hugely.
	The collapse of the pensions system explains another phenomenon.

Alan Johnson: Collapse?

Peter Atkinson: The Secretary of State says, Collapse? and laughs at the word. He comes from a different backgroundpublic servicebut if he had his own private pension he would know that he will probably get back more or less what he has put in, pound for pound, over the last 20 or so years and not a single pound in profit as a result of his investment. That is what most people in the private sector face, if they have a pension at all. Protected though he was by the public sector, he should, I hope, not be ignorant of what is happening in the real world.

Alan Johnson: There is obviously political knockabout here. The hon. Gentleman used the word collapse in relation to pensions, but will he confirm that the Pensions Commission has said that, at the moment, pensioner income is at record levels? It will continue to rise. There is no crisis at the moment; it will come 15 to 25 years down the road if Governments, whatever their political persuasion, do not act to ensure that we will be able to deal with the baby boomer generation moving on to retirement.

Peter Atkinson: Crisis? What crisis? In fairness, the Secretary of State is talking about something slightly different. I am talking in particular about those with company pensions and private provision pensions. They are the ones who have been putting their money in bricks and mortar and in commercial property to safeguard their future. They are the people who are hit by the Chancellor's ridiculous decision to cut the amount that can be put tax free into individual savings accounts and other investments.
	I accept what the Secretary of State saysin the long term, of course there is a problem down the line for the basic state pensionbut that is a different problem from the immediate crisis that this Chancellor has caused for those with private sector pensions. It is a shame that he had nothing to say about that. The one word that we did not hear, as my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) pointed out, is the magic wordprudence. Sadly, prudence is now dead and buried.
	I want to make one or two other points about the problems facing business and to deal with the point made by the hon. Member for Wallasey about the welter of legislation, such as all the European directives. I agree that such measures must be simplified, but it is important to acknowledge their impact on growing and smaller businesses.
	I represent a constituency in the north-east of England, which, as everyone knows, had a large number of old, declining industries such as coal, steel, chemicals and shipbuilding, which have long since been laid to rest. We needed to replace those, which we did with a large number of important high-tech inward investors. Some of them, such as the Nissan car company, have been tremendously successful, but others have been what might be described as false friends. They came here and made a contribution, but when economic circumstances changed they moved from the north-east to lower-cost economies. The lesson we have learned is that while they helped with the transition from the old heavy industries to a new type of economy, they are beginning to disappear.
	Regions such as the north-east must now rely on home-grown industries. We in the north-east have been very successful in doing so and, to name a few, we now have companies such as Sage; Greggs of Gosforth, which was a little baker's shop but is now a national chain; the Go-Ahead group; and Reg Vardy in motor distribution. Those are great success stories, but we need many more. We will achieve that by building up our new smaller businesses, but regulation can damage them so much.
	Regulations on discrimination, paternity leave and maternity leave are well intentioned, but for a small business employing three or four people they become a considerable burden in both time and expense. Letters and representations from local businesses in my constituency, which are mostly small businesses, show that such regulations are becoming a heavy burden that restrict their development. That fact must be taken on board when such matters are discussed.

Angela Eagle: Does the hon. Gentleman agree that consolidation and simplification of many different statutes, introducing a much-simplified and easier-to-understand statute, both for employees and employers, would improve the situation and not worsen it?

Peter Atkinson: I wait to see the small print of what is produced and how it works, but in principle I agree that that would be desirable. When we have such a plethora of regulation, the way in which officialdom interprets it can often be the problem. In one area, enforcement can be draconian; in another, it can be more reasonable. Regulation in relation to access for disabled people requires a certain amount of common sense, and if common sense is not forthcoming, that can be very hard on a business. Such businesses need to grow, and we must not throw huge obstacles in their way. If the north-east is to rebuild itself and have a decent future, we need to encourage them, not discourage them.
	I should also slightly chide the hon. Member for Ochil (Mr. O'Neill). Yesterday, if I read my Financial Times correctly, referring to the concerns of the British Chambers of Commerce about over-regulation, he said that its figures were statistically dubious and that employers were obsessed with protesting against regulation. I disagree fundamentally. My experience is that they are genuinely worried about such regulation, and see it as possibly one of the biggest drawbacks to expanding and developing their business.

Martin O'Neill: I was questioning, in the first instance, the rather haphazard way in which the British Chambers of Commerce conducted its survey. There was no real samplingit was a self-selected group of people, who had perhaps replied by computer, and perhaps sent in forms. It was rather sloppy, and it did not stand up to close examination as an accurate expression of opinion of British business. It was more of a propaganda tool for a group of people who seemed to have as much a political as a business agenda.

Peter Atkinson: I am not sure that I can complain about the hon. Gentleman's last comment, but I am grateful that he has put it on the record. I urge him and his Committee to bear it in mind that over-regulation, and bad regulation, is seen as one of the greatest drawbacks for business.
	Regulation can also be amazingly trivial. There is a small butcher's shop in my constituency, which, because it is owned by a number of farmers, likes to put up a sign saying, This lamb came from so-and-so's farm, or This beef came from so-and-so's farm. It received a letter about how it should label meat, its interpretation of which was that all that could be displayed on the board was a holding number, which would be utterly meaningless. I wrote a series of letters to Lord Whitty to try to get to the bottom of the matter. I discovered that the shop can show which farm the lamb came from, but that if it wants to do the same for beef it needs to obtain permission from the Department for Environment, Food and Rural Affairs and then get a form, which it can download. I worry slightly about chaps who work in the butcher's shop downloading forms from DEFRA. Nevertheless, they can download the form, fill it in, send it back on-line, and, I hope, get permission to put up a sign saying that the beef came from Joe Bloggs's farm. That is a silly example, but it nevertheless illustrates the kind of regulation with which people must deal these days.
	The Chancellor was silent on many aspects of the economy about which we wanted to hear. He was silent on one little aspect that is not mentioned much here nowadays, although it is very important, certainly to my constituency. Although it is never mentioned in Budget speeches or economic debates, agriculturewhich had a reasonable year last yearhas had a disastrous year in terms of farm incomes this year, because of wet weather and the new single farm payments scheme, which is causing uncertainty about the way in which they are paid. There have also been hugely rising costs.
	Rising costs affect all businesses, but one of the businesses that they affect most is agriculture. Fuel and imported fertiliser costs form a large part of the agriculture bill. At a time when incomes have fallen because of a poor harvest, the supermarkets are yet again pushing down the price that they pay dairy farmers. One of Asda's suppliers is reducing the price by 0.5p a litre, which is a serious blow to the dairy farming community.
	There was nothing much, apart from a rant, in the Chancellor's speech. I hope that we shall hear more tomorrow about how he proposes to address the real problems that face so many people in this country today.

Sally Keeble: I am grateful for the chance to speak, and particularly grateful for the chance to speak in today's debate. The Queen's Speech includes measures on the economy that are fundamental to the well-being of my constituents, and will be fundamental to what happens next year when the election comes along. They affect my constituents particularly in two ways: they illustrate the Government's continuing commitment to economic stability, and they introduce important new provisions. Economic stability has been fundamental to the security enjoyed by my constituents in their homes and in their work, and to their sense of well-being under the present Government. It has made possible sustained investment in public services, which has also greatly improved my constituents' quality of life.
	The hon. Member for Arundel and South Downs (Mr. Flight) said that none of that was visible. In particular, he said that the spending was not visible and that public sector spending was ineffective. That is certainly not true in Northampton. The change in the fortunes of people there under a Labour Government are extremely visible, and continue to be so.
	I well remember, in the run-up to the 1997 election, taking our then housing spokesman, my right hon. Friend the Member for Greenwich and Woolwich (Mr.Raynsford)now Minister for Local and Regional Governmentto look at some repossessed houses. We thought that we would see one or two, but we saw rows and rows of them. Now repossessions are at record low levels because of low mortgage interest rates. I accept that the rates have gone up a little recently, but given higher employment and financial security, people have been able to maintain their mortgage payments. Unemployment has fallen further, by 28 per cent. in my constituency. The constituency has always had high employment levels, but this drop has made a substantial difference to the well-being and financial security of families who work.
	As for public sector investment, one of the things that we inherited from the last Government was scandalously low pay in the public services. It is right that some of the extra money going into public services should deal with pay levels and employment conditions for the people who provide those services. But over and above that, such investment has transformed the prospects of many young people. For example, a 106 million private finance initiative scheme is rebuilding all our schools.
	The hon. Member for Hertford and Stortford (Mr. Prisk) spoke persuasively about the problems that businesses encounter with regulation, and all of us can understand their frustration with red tape. But when I first became an MP, the local chamber of commerce's biggest complaint was the underperformance of schools and the skills gap. The extra investment in schools, particularly in secondary schools, is key to expanding the economy and creating the long-term security that the people of Northampton want.

Mark Prisk: The hon. Lady is right: schooling, the calibre of individuals and the skills aspect of learning in particular are important issues. Given that she recognises that the burden of regulation is an important issue for small businesses, does she think that the 53 per cent. increase in such regulation since 1997 is a good thing or a bad thing?

Sally Keeble: As the hon. Gentleman may have noticed, I am not a particularly tribal politician. Small businesses usually consist of people who are simply earning an income for their families, and for that reason many banks have virtually turned their small business financial services into personal financial services. I recognise that those who run such businesses do not like filling in forms. Of course we want to see a reduction in regulation, and I understand people's complaints in that regard. Nevertheless, if we want to expand the economy, we come back to the major issue of skills shortages.
	We should remember that this Government have made available the finance to expand small businesses. The investment in early years has been key to the economic well-being of families, particularly because it has enabled women to go out to work. One of the last things that my right hon. Friend the Secretary of State for Work and Pensions did before getting his current job was to visit University college Northampton, a higher education college in my constituency that will shortly get university status. The expansion of university places, and what that says about our attitude to skills, has been extremely important to the economy.
	I want to highlight some of the wallet-to-purse measures that, although I previously identified such criticism with the Liberal Democrats, both Opposition parties have criticisedsuch as the new deal for lone parents, the pension credit and investment in child care, particularly the children's trust fund. The new deal for lone parents has been transformative, in that it has enabled some of the most excluded of unemployed people to return to work. It has allowed some of the women to whom I have spoken to get work, to provide a role model for their children, and eventually to buy their own homes. Similar things can be said of the investment in child care.
	The pension credit has its shortcomings, but anyone who tried to persuade a female pensionera lot of the recipients are indeed womenthat they would be better off without their 5, 10 or 20 a week would receive a blunt suggestion about what to do with their argument. As we approach the election, it will be interesting to discover what such people have to say once it becomes clear that not only are the Conservatives taking a hostile attitude to many of the measures that provide equality for womenwe are well used to their doing thatbut the Liberal Democrats are doing the same.
	I want to move on to a couple of the measures in the Queen's Speech. There is a child benefit Bill, which will provide for an extension of the education maintenance allowance. I suspect that it will be one of those measures, little heralded and little talked about in this place that will produce lasting benefits for many people. Support is already provided for more than 1,000 people in Northamptonshire, and the feedback that I receive from single parents who are struggling to ensure that their older children stay on at school rather than go out to work has been very positive. I am rather surprised that we have heard no comments about that from either the Liberal Democrats or the Conservatives. I quite understand that people may be waiting for Second Reading, but the fact remains that this provision has been piloted and is already out there, so I would have expected to hear some comments from the other two parties on the theory or practice of that support. The legislation will reach a particular section of the community and bring real benefits to my constituents. Not everyone among my constituents aspires to go to universitymore's the pity, in some ways.

David Willetts: I assure the hon. Lady that my hon. Friend the shadow Secretary of State for Education and Skills touched on the measure in his comments on the Queen's Speech, and welcomed the child benefit measures. His concern was with the introduction of new and higher charges for adult learners in further education collegesanother matter that we can debate further in the weeks ahead.

Sally Keeble: I am grateful to the hon. Gentleman for clarifying that point, and I wish that the Liberal Democrats would clarify their position, which their spokesperson today did not do.
	Some of my colleagues have mentioned the consumer protection Bill, which will provide important safeguards for my constituents. People in Northampton carry high levels of credit. We all know that Christmas is coming, and this morning I was told by the housing and money advice centre, which provides an excellent service for my constituents, that on average people will spend about 800 in presents, about half of which is likely to be on credit. Consumer debt and the need for safeguards are important matters at this time. I welcome the fact that the Bill will make provision for much needed better regulation and raise the present 25,000 limit. On the subject of local debt, about half the people who had severe problems, with debts of about 9,000 or more, were not in work. In an area with relatively high levels of employment, that is quite surprising. One sure way to deal with debt problems is to deal with the problems of poverty and unemployment, and the Government are committed to doing so.
	I greatly welcome the measures in the Queen's Speech, although there is always room for more to be donenot just in extra measures, but in speeding up those already in place. The ending of child poverty was mentioned earlier. I would greatly welcome that, as I would the speeding up of the extra safeguards for children, particularly in connection with housing. I am reminded that last Friday night I visited a constituent who lived with her five children in a single room in the basement of a bed-and-breakfast hostel, placed there by a Labour councilno, it was not a Labour council but a Conservative one. That was a Freudian slip. It used to be Labour, but is now Conservative and standards have deteriorated. For a woman with five children to live in a basement flat is not appropriate in 21st century Britain, and she was but one of three women who came to my advice surgery with that problem. I hope that we can speed up some of those measures.
	I would also like to see improvements to pensions, as several of my hon. Friends have said. I know that my right hon. Friend the Secretary of State for Work and Pensions is very aware of the issues around women's pensions and the problems that women face as long as basic state pensions are closely linked to national insurance contributions. The issue of first-time buyers is also important.
	The main thing that will safeguard the interests of my constituents is having a Labour Government, and the main threats to their interests are the two main Opposition parties. As always happens in debates on the economy, people focus on the big picture and the macro-economy, but for many of our constituents the little picture is the big picture. The 5, 10 or 20 in pension credit is what makes a big difference to their lives. Being able to get their children into nursery schools and the investment in the child trust fund will also transform the lives of my constituents. The education maintenance allowance, too, will help single parents who are struggling to ensure that their children stay on in school and get the qualifications that they need in an expanding economy.
	I very much welcome the measures in the Gracious Speech and I look forward in particular to the two Bills that I have mentioned becoming law well before the magic date of 1 May next year. When that day comes, my constituents will have had their letters about the child trust fund, which the Conservatives think that they should not have, some of them will be receiving the education maintenance allowance, and they will all continue to see the benefits of having a Labour Government.

Paul Farrelly: I wish to touch on three subjects that are fundamental to the Government's objective of building a stronger economy and an even fairer societyemployment, training and opportunity for all. I also want to make some remarks about Britain's economic stability, because we have heard some wild and outrageous attacks on the competence and record of my right hon. Friend the Chancellor, not least from the shadow Chancellor, who is not in his place.
	The House has already been reminded that the right hon. Gentleman was such an embarrassment to the Conservatives at the last election that he had to go into hiding. What was his offence? He had accidentally blurted out the truth about 20 billion of cutsa lower level of cuts than he now promises openly under the party's new regime.

Mark Prisk: Did not the Gershon report recommend a reduction in expenditure of 20 billion?

Paul Farrelly: We will have to wait for the Gershon report and we will all welcome debate on the James report when it is published.
	The Opposition need a history lesson on economic competence that stretches further back than the one that my right hon. Friend the Chancellor has already given them today. That is just as well, because this debate falls on an anniversary well worth remembering for my constituents. It is 20 years to the month that post-war unemployment peaked in Newcastle-under-Lyme. Today, after seven years of growth and stability under this Government, the number of people looking for work in my constituency stands at just over 700. Twenty years ago, the dole queue was longer by 4,500 peoplesix and a half times more people. That is a fair measure of how much outlook and opportunity have changed under a Labour Government.
	Twenty years ago, north Staffordshire's oldest pottery firm had just bitten the dust. Elijah Cotton founded his firm in 1758, a year before Josiah Wedgwood started out on his own. However, Cotton's descendants lasted barely a year under Margaret Thatcher. We should remember that that industry was more than decimated as Geoffrey Howe unleashed raw, uneducated monetarism on this country.

Peter Atkinson: Is the hon. Gentleman saying that, had there been a Labour Government 20 years ago, that pottery factory would still be open and that men would still be working in the coal mines in his constituency?

Paul Farrelly: I shall come on to the beneficial inheritance of oil, especially for the Conservative Government. To set the record straight, under Labour, from 1976 until the 1979 general election, unemployment fell. It continued to fall until just a few months into the Tory Government, from which point it rose, rose and rose again.
	My right hon. Friend the Chancellor is fond of quoting the 15 per cent. level to which interest rates shot up during the second recession that the Tories unleashed on this country much later, in the 1990s. Today, as we know, rates are still below 5 per cent. Then, however, there was a worse bogey figure with which to scare the wee bairn: during the first savage downturn under Thatcher, rates reached 17 per cent. Sterling soared and yet more industry fell. By the time the monetarist experiment was killed off, quietly, during the Falklands war, one in six families in my areanorth Staffordshirehad been hit by redundancy. There was no respite, however. Far from it. In 1985, the biggest mine in my area, Wolstantonour super-pit, which we visited when I was at school there and which had the deepest shafts in western Europeclosed for good.
	Let us compare that legacy with the current record. We have never had lower unemployment; we have never had more employment and regeneration. The unemployment figure for the whole country is 836,000nearly half the total in 1997, when it was 1.6 million. Since 1997, the figure has fallen steadily. Under the Tories, when the Wolstanton pit closed, unemployment broke through the 3 million barrier for the first, but far from the last, time.
	Early on, the Tories' record made a mockery of their infamous slogan, Labour isn't working. Our record shows that people are working, businesses are working and Britain is working. Labour certainly is working.
	As we heard earlier in the debate, we are educating and training, too, and what a record of Conservative failure we are trying to reverse on that score. Before the Tories got into power all those years ago, skills in the pottery industry in my area were supervised by the ceramics training board and pay negotiations were industry wide, but under the Tories there was no such thing as society. They swept all that away and it was every man for himself.
	Members may not believe this, but at the Michelin factory in Stoke-on-Trent all those years ago, apprentices were given free milk, lunch tokens and sun-lamp sessions to keep them healthy. Remember what the Tories did to apprenticeshipsthey disappeared. I am not asking for the return of the sun-bed sessions[Hon. Members: Oh, go on.] Some Front Benchers already benefit from them.
	Over the past seven years, my right hon. Friend the Chancellor has been doing his level best to reverse that legacy of neglect in education, skills and training. When I made my maiden speech, I called for the pilot schemes for the education maintenance allowance to be extended to my town and nationwide. They have been extended. In Stoke-on-Trent, next-door to my constituency, the EMA has already led to more children from poorer backgrounds staying in education and training after the age of 16. In my constituency, our versionthe Newcastle achievement schemeis having similar positive effects that everyone can measure. Conservative cuts would, of course, sweep all those opportunities away.
	In my area, the Ceramic Resource Centre, a partnership between the Ceramic and Allied Trades Unionthe potteries trade unionthe DTI and our regional development agency, is helping workers to retrain and find new jobs. It also helps to preserve valuable industrial skills that would otherwise be lost. Tory andI am sorry to sayLiberal Democrat cuts would sweep that away, too.
	In Newcastle, the new deal has helped nearly 2,000 people into work. Of those, more than 1,200 have permanent jobs as a result. As we have already heard, the Tories and the Lib Dems would scrap the new deal. The Chancellor has done all that while presiding over the longest sustained period of economic growth for two centuries. There has been no savage boom and bust, unlike the early '80s, the late '80s and the early '90s under the Tories and yet, despite that, and despite their record, they have the nerve to cast aspersions on our competence, on the Chancellor's prudence and on his golden rule. Conveniently their memories fail them again.
	Today, we should remember that we are not living in what should have been the heydays of the '80s and '90s, when the Government enjoyed a twin set of richesbooming tax receipts from North sea oil and untold billions from privatisation. Labour did not enjoy them in the 1970s either, when the country, like the international economy, was suffering oil shocks and when we were investing for the future in the North sea. Now, of course, we are having to prepare for a post-oil and gas economy too. But what did the Tories do with their one-off riches? Did they invest in education and skills? Did they invest in public services and the country's infrastructure? No. They blew it and threw it away.
	I remember wellI was working for The Observer at the timeall the gloomy faces on the Tory Benches when the Government announced that they had raised 22.5 billion from the sale of the third generation of mobile telephone licences. That was worth three privatised BPs, five British Gases, two whole British Telecomsworth as much, indeed, as was raised from the sale of the electricity, gas and water industries all put together under the Thatcher and Major Governments. And of course, unlike their sell-offs, it was not a botched sale below value. Great care was taken. Bidders went through a carefully crafted auction of 150 rounds. My right hon. and hon. Friends immersed themselves in the intricacies of game theory.
	Now compare that care, competence and prudence with what went on before. I remember the privatisation of the National Bus Company in 1986. I remember it very well because I was working in the City at the time, with Barclays De Zoete Wedd, the bank charged with its sale. [Interruption.] I am not afraid to admit it. No sooner had Nicholas Ridley chopped the buses up into 90-odd pieces than the patchwork quilt was zipping itself up again as the first companies privatised started buying the rest, as we warned the Government that they would.
	The Conservative Government ignored our advice too on insisting on clawbacks of the profit on the future sale of companies, which was standard procedure in the private sector. They ignored it, and what happened? Ten years later, they were at it again, breaking up British Rail, wrecking an industry, selling state assets at a discount to profiteers. They did not listen and they did not learn because they did not care. And here is the nub. How did they treat the money? Did they, like the Chancellor, treat it as a one-off to pay off debt, as any prudent householdin Grantham, for examplemight be expected to do? No. Conservative Governments treated it as negative public expenditure. No wonder then, when the silver ran out, that the public finances were in such a mess. The Chancellor need take no lessons in competence and no lecturing from the Tories on his golden rule or his golden record.
	I think that it was the last Chancellor but one, Mr. Norman Lamont, who said, quite callously, that high unemployment was a price worth paying for low inflation. Now we have record low inflation and record low unemployment. Of course, Lord Lamont's repertoire also includes the infamous, Je ne regret rien, which he sang in his bath both before and after the pound was unceremoniously dumped out of the exchange rate mechanism. I gathered with others around the Reuters screen when I was working for Reuters, just as the Chancellor and the Prime Minister gathered around the Reuters screen at No. 10, and I remember that, when the interest rates had gone from 10 to 15 per cent., that was not the limit of it because overnight money rates trying to keep money in this country were reaching 70 per cent.a far bigger bogey figure.

Mark Prisk: I am enjoying the hon. Gentleman's sunlamp-lit contribution, but can he confirm what the Chancellor said earlierthat the Chancellor voted in favour of going into the ERM?

Paul Farrelly: Quite right. We are all committed to a stronger Europe, but we did not decide the level at which we entered the ERM, out of which we were then unceremoniously dumped. [Interruption.] I will say one thing to the hon. Gentleman. The Tories are nothing if not consistent: they learn nothing and they still regret nothing. The shadow Chancellor's promised tax cuts and massive spending cuts are the sort of fairy-tale accounting that we saw for 18 long years.
	The Tories had a black Monday when their bubble burst in the 1980s. They had a black Wednesday when their reputation was ruined with the ERM fiasco in the 1990s. Some time very soon, they will have a black Thursday when the Government's economic and social achievements condemn them to a third successive defeat at the next general election.

Mr. Deputy Speaker: I call Mr. Jim Cunningham.

Hon. Members: Hear, hear.

Jim Cunningham: I did not know I was so popular.
	It has been an enlightening afternoon listening to the Opposition. They said the Chancellor was ranting. I thought he said one or two interesting things. Very little has been said about how he has led the way on third world debt, which has been acknowledged internationally. He also touched on the new vaccine that will help people to combat AIDS in the third world. It was not all a rant; his speech contained some positive things. On the other hand, the shadow Chancellor never gave us any alternative. He said that we would all know what was going to happen a couple of months down the road. That was enlightening. So if anybody ranted, it was the shadow Chancellor.
	The Liberal Democrats raised the issue of tax credits in terms of research and development. I do not know whether they know this, but research and development is a hefty cost in any industry. When that is linked to companies, and taking into consideration the input from universitiesmany of which are funded by research and development moneyit is clear how vital it is to British industry. If we do not put money into research and development, we will lose out in trade, exports and balance of payments and we will have problems.
	The other thing that surprised me was that the Liberal Democrats did not offer a replacement. It is not good enough to say that the money will be taken anyway because it will be on offer. In fact, I and a number of others used to go with the trade union movement to lobby the Department of Trade and Industry under the Conservative Government to get money pumped into research and development. Anyone could see that if we did not do that, the country would run into serious problems. As time has proved, the current Government are having to put money into not only research and development, but technology education to teach people how to use that technology.
	When I am talking about industry, it would be remiss of me not to mention the useful demonstration in Coventry on Saturday to show the feeling about Ford's arbitrary decision to close the Browns Lane plant. Ford entered into an agreement in 1998 that if the work force increased its productivity and quality, further investment would follow for new models to be built at that plant. It was used as an example up and down the country, certainly in Ford plants, as the road the labour force should go down to secure their future. What did they get in return? A slap in the face, because the factory is closing.
	In debates on the economy, successive Governments have exhorted the labour force to increase quality and productivity. The Government encourage it, the workers do it and there are relevant orders, but the plant gets closed. What signal does that send to the labour force up and down the country? We know that we have to be competitive. We have to improve quality, technology and other things. I could not let that closure go without mentioning it. The year before, it was Massey Ferguson in Coventry. Under the previous Administration, it was the Standard motor car company.
	My hon. Friend the Member for Ochil (Mr. O'Neill), the Chairman of the Trade and Industry Committee, mentioned Peugeot, which has a grant to use on development. We are waiting to see how that money will be used. We Members of the Parliament and the Government have to keep an eye on the companies. We must not forget that Ford got about 85 million in Government grants. It has been suggested that it would probably be cheaper to keep the Browns Lane plant open than to close it, but we have all heard that sort of suggestion. The company has given us all sorts of assurances about the Whitley plant, but if it has broken the assurances it gave us four or five years ago, why should we believe the company now? Ford tells us that it has exciting plans, but why should we believe the company when it has broken an agreement?
	Like my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly), I remember when we joined the ERM and the consequences of doing so. I remember when interest rates went through the roof and when they changed three times in one day; that did not stabilise the money markets, did it? The Conservatives say that we will have to borrow as a result of the Chancellor's Budgets, but they forget that they borrowed 50 billion. Of every pound paid in interest, 50p came from the taxpayers' pocket. We should not let the Opposition get away with some of the things that they have said today.
	Opposition Members have talked about old-age pensioners, but I remember coming down on a Friday morning trying to get winter chill payments passed. When the Conservatives were in Government, they blocked the measure time and again. I also remember the Conservatives increasing VAT on fuel; was that going to help pensioners? It was the Labour Government who reduced it. We have long memories. We know what the Conservatives are capable of doing in government and no matter how they try to dress it up, their past will come back to haunt them. I am sure that most of us remember negative equity; Opposition Members have talked about rising house prices today, but I am sure that most people would agree that negative equity is far worse.

Richard Allan: Before the hon. Gentleman complains too loudly about negative equity, he should look at some of the forecasts that suggest that it might return in the near future.

Jim Cunningham: I like to look on the bright side of life. Opposition Members are full of doom and gloom, but it is part of their job to exaggerate and twist figures.
	The CSA has been mentioned, but I seem to remember that it was the Conservatives who introduced the Horizon project, which cost about 500 million and then cost about 90 million to put right. We should not let the Conservatives forget that they introduced some of the systems that we are suffering today. If we have problems, they are the ones who started them.
	The Government have done some positive things. The introduction of the national minimum wage was a milestone in many ways and it has steadily been increased since its introduction. I do not think that employers see it as a fair rate; we can debate the proper level for the national minimum wage, but I do not think that employers use it as a benchmark. That was a red herring that someone introduced into the debate.
	The Opposition failed to mention that although pensioners can now take their giro cheque to a post office and get it cashed, there is concern about bank charges. Ministers are aware of this, because we have raised it with them. Some banks are charging about 1.50 to cash a pension cheque, and I hope that my hon. Friends on the Treasury Bench will look into that.
	The Opposition have not set out their policies. It is all very well for them to attack, but it is no use if they do not do so constructively, which involves saying what they would do. It was interesting to note the Opposition parties' proposals on assistance for small businesses. The Liberals want to abolish the Department of Trade and Industry and the Tories want to restrict its sphere of interest, yet both say that they want to help small businesses. Their proposals are a contradiction in terms: they want to help industry but to cut the means to do it. When the proposals are analysed by others outside the House, the problems will be seen.

John Taylor: Will the hon. Gentleman give way?

Jim Cunningham: Yes. I always give way to the hon. Gentleman.

John Taylor: I am grateful to the hon. Gentleman for his characteristic courtesy in giving way. May I suggest that there is not quite the anomaly that he suggests? One of the best ways of helping small businesses is to leave them alone.

Jim Cunningham: I am sure that everybody would agree that we should leave them alone, but we must think about health and safety. There must be some regulations in place. There is an argument about red tape and regulation but we should not forget that health and safety issues are part of that. We will debate corporate manslaughter, for example, and it is clear that regulations have many meanings. We have minimum wage regulations. The Opposition raised the issue of regulations from Europe, and I remind them that when they were in government they brought in more regulations from Europe than any other Administration. They would deny that, but the Council of Ministers approved the regulations and read them into the British system

David Taylor: My hon. Friend referred to the need for improved health and safety. Does he agree that one of the welcome intentions flagged up in the Queen's Speech was the legislation relating to corporate manslaughter? If more attention had been given over many years to the highest of standards for health and safety, there would be less need to act on corporate manslaughter in cases where that has tragically been the position.

Jim Cunningham: As someone who worked in industry, I always think that it is a tragedy when it is necessary to introduce legislation to get employers to act as good employers. They have a duty of care. For too long employers have been getting away with many things that they should not have been allowed to ignore.
	I welcome the opportunity to take part in the debate. It has certainly been interesting to listen to the speeches of Opposition Members. They do not have any policies and want to postpone any answers to the questions that we put to them. If we were to listen to the main Opposition party, the Conservatives, we would be back to the days of boom and bust. So far, all we have had from the Opposition Benches is baloney.

David Willetts: I begin by drawing the attention of the House to my entry in the Register of Members' Interests.
	As we come to the end of the debate on the Queen's Speech, perhaps as well as covering some of the Bills that are in the speech I might ask about one or two Bills that are not in it. We are in a strange position because we have all the Bills that have been announced in the Queen's Speech but if there is an election next May, as we have been told, very few of them are likely to come into law. [Hon. Members: Who told you that?] We know from Mrs. Blair. What greater authority could there be? There is also The Sun. If they agree, who are we to disagree? If we have Mr. Trevor Kavanagh and Mrs. Cherie Blair saying that it will be 5 May, I think we can work on the basis that that is quite likely.
	A great deal of legislation has been announced in the Queen's Speech that may never have the force of law, but I wonder whether the Secretary of State could cast any light on a measure that might well enter into law though it was not referred to in the Queen's Speech: the judicial pensions Bill. For some strange reason it was not referred to but there was then a press release from the Lord Chancellor's Department announcing it. It appeared on the Lord Chancellor's website as an item of legislation, but it has since been removed.
	I am perplexed as to the status of the Bill. As it has pensions in the title and as the Secretary of State has pensions in his title, there might be a chance that he can tell us what is happening. We would be interested to hear from him about the status of the Bill. We very much look forward to watching Labour Members walk through the Division Lobby to vote for judges to have a pension of more than 1.5 million. I am sure they will enjoy that. I should make it clear that we, the Opposition, believe in good pensions for the many, not just the few. We look forward to hearing the arguments that the Secretary of State and his Front-Bench colleagues advance for special arrangements for the few rather than the many. That is one piece of legislation that may or may not come into law. We hope that the Secretary of State will explain the position.
	There is also the problem of age discrimination, to which the hon. Member for Wallasey (Angela Eagle) alluded. She set the Chamber alight with a reference to post- neo-classical endogenous growth theory, and went on to talk about the importance of tackling age discrimination following the European Union directive that was agreed several years ago. In a parliamentary answer on the subjectand I have checked thisthe right hon. Member for Makerfield (Mr. McCartney), who used to be Minister for Pensions, said that legislation would be forthcoming in 2003. It has been forthcoming for an awfully long time, so it would be interesting to know from the Secretary of State for Work and Pensions what the timetable is. The Government have already failed to meet their objective of introducing draft legislation by the summer, so what is their position on age discrimination?
	The Queen's Speech, of course, includes an Identity Cards Bill. My right hon. Friend the shadow Home Secretary has already asked some telling questions about ID cards that need to be answered. The hon. Member for Sheffield, Hallam (Mr. Allan) made some powerful points about the issue, drawing on his expertise in IT projects. The introduction of identity cards would involve a major Government IT projectindeed, it would be one of the biggest in the country. I was wondering which member of the Government would want to have a word with the Home Secretary about running such projects. Perhaps it would be the Secretary of State for Work and Pensions, who could say a quick word about his success with the Child Support Agency computers. Perhaps the Paymaster General would like to chip in with her success with child tax credits. We have two ideal witnesses to testify to the success of large-scale IT projects, and I am sure that the Home Secretary would be interested to hear exactly how they have done it, and pick up tips from the CSA and child tax credit projects as he embarks on his even more ambitious project.
	The Government believe that they need to tackle the problem of insecurity, and the Home Secretary claims that his measures will increase our security. The theme behind several interventions and speeches today, however, is insecurity in the economic arena. Financial insecurity is at least important as physical security, and is an equally niggling anxiety. The Chancellor's record has exposed the British economy and individuals in the country to a range of insecurities, including the balance of payments deficit, the budget deficit, and the problems of economic inactivity and insufficient savings. It is a pity that he is not in the Chamber. [Hon. Members: He has just arrived.] Ah, he has entered on cue, adding another touch of pantomime to the several that we have had in our debate. For example, his latest claim is that we are supposed to be responsible for 70 billion of cuts. As he becomes more desperate, so the figure grows absurdly large. His arguments, however, were demolished very effectively by my hon. Friends the Members for Hertford and Stortford (Mr. Prisk) and for Cotswold (Mr. Clifton-Brown).
	As the Chancellor is here, let me talk about the four imbalances in our economy that are a threat to the security that we all want our fellow citizens to enjoy. First, the balance of payments deficit, as my hon. Friend the Member for Arundel and South Downs (Mr. Flight) skilfully pointed out, is a crucial piece of evidence in a modern global economy. It shows that our economy faces demand far in excess of its ability to match it with supply. Even if we do not have growing inflation, a growing balance of payments deficit is evidence of an imbalance, and the Chancellor clearly lost the exchange with my hon. Friend.
	The second imbalance is the growing budget deficit. If the economy is doing so well, as the Chancellor claims, why is the deficit deteriorating steadily? Why, at this stage of the economic cycle, this year, can we see such a large fiscal deficit? It was disappointing that the Chancellor failed to engage with all the warnings that he was in danger of breaking his own golden rule. He seems to be in a world where we do not face any long-term fiscal problems as a result of his policies. Let me quote to him what he said on the Today programme on Monday 18 November. He said that
	in the Euro area pensions expenditure is 10 per cent. of national income and is due to rise to 15 per cent. over the next 30 or 40 years. And that's why major reforms are taking place in pensions in Germany, France and elsewhere. But in Britain the picture is one where we have 5 per cent. of our national income spent on pensions. It is a perfectly sustainable position over the longer term.
	Does the Chancellor really believe that with his pensions policies, public expenditure on pensions will be 5 per cent. of our national income from now till kingdom come? It is already higher than that. If he read the Turner commission report, which brings together fully all the different items of expenditure on pensions and includes not just the basic pension but expenditure on all the means-tested benefits for pensioners and public sector pensions, which he tries to hide away, he would see that the figure is already more than 6 per cent. and is forecast to rise still higher. With his policies, we are converging with Europe on one of the continent's worst problemsgrowing public expenditure on pensions. An earnings-linked pension credit going to three quarters of pensioners or more has not been factored into his calculations.
	It is not just the flow of expenditure but the liability and the stock of debt that are problems. The Chancellor talks about how he has brought down the national debt, and we heard that again from the Labour Benches. A truer measure of the national debt would include the liability to pay public sector pensions in the future. If the cost of public sector pension promises is included, the true national debt has risen under the Government by 5 per cent. of gross domestic product, as the expensive promises to pay public sector pensions have racked up.
	So we have problems on the balance of payments and on the fiscal policy. Let me speak briefly about unemployment and economic inactivity. We have heard from several Labour Members how unemployment has fallen, but more than half the fall in official unemployment has been offset by a rise in economic inactivity. There are more people who are economically inactiveout of the labour marketin Britain today than at any time for the past 20 years. People are being driven out of the labour market altogether. That is what is happening under this Government. The problem is affecting some of the groups that they claim to care about most.
	I am sure the Chancellor is familiar with table 14 of the labour market statistics produced every month. The figures for economic activity and inactivity show that for people aged under 25, the total number who are either unemployed and not in full-time education or economically inactive and not in full-time education is 1.112 million. That is a higher number of young people who are not working, studying or training than when the Government came to office in 1997. That is a lost generation of more than a million young people.
	The position is deteriorating. Despite everything we hear about the new deal for young people, the figures represent a deterioration on the position that the Government inherited. That is why we say that the new deal for young people is not working. We have heard in the past from the Secretary of State for Work and Pensions, and I must correct him. He has claimed:
	We've virtually eradicated long-term youth unemployment.
	Again, on the Government's own survey measure, the latest figures show that there are more than 150,000 young people aged 18 to 24 who have been unemployed for more than six months. There is a problem of young people who cannot find jobs, who are out of the labour market, who are not studying, training or working, and it is a pity that the Government do not engage with that, instead of endlessly repeating their mantras about the new deal.

Rob Marris: Will the hon. Gentleman switch focus to the first line of the amendment to which he has put his name, which discusses reducing regulation? He has had five hours to think up an answer to this: will he tell the House three regulations that he thinks should be revoked?

David Willetts: We have made it clear that we will reverse many regulations. I will not fall for a desperate attempt to divert me from my critique of this Government's failure to tackle inactivity and unemployment. I want to discuss the failure of the new deal for lone parents, which several hon. Members have discussed. The Chancellor may be one of the few people who reads with relish the evaluations of the schemes that he invents, but it is a pity that he does change his policies in the light of the evidence.
	I shall quote an evaluation of lone parent work-focused interviews, which are an important part of the new deal for lone parents, published earlier this year. The research report by outside academics states:
	The Introduction of Lone Parent Work Focused Interviews brought about no detectable change in exit rates from Income Support for eligible new or repeat claimants.
	That is the evidence about the failure of the Chancellor's schemes, which is why we are so sceptical.
	Finally, I shall discuss the pensions crisis and the amount that we, as a nation, are saving. I pay tribute to the Secretary of State for Work and Pensions, who has taken a novel and refreshing approach to his job. He has given up defending Government policy, and I wonder whether the Chancellor knows exactly what his colleague gets up to. I am not sure that the Granita pact permits the Secretary of State to make these statements, because I thought that it meant that the Chancellor determines such matters.
	On the pension credit, the Secretary of State has said:
	we should not talk in euphemisms. It is a means test.[Official Report, 13 October 2004; Vol. 425, c. 302.]
	and
	It would be crazy to say
	that means-testing
	did not act as a disincentive to some people.
	At a conference, he admitted that the Government
	still has a take up problem on Pension Credit.
	He has wholeheartedly endorsed all the arguments put by Conservative Members.
	This is the Secretary of State's most ambitious statement of the lot:
	People feel there is no reward for playing by the rules, and one of the critical areas is pension provision. We have to bite the bullet and look at the state pension system, certainly for the longer term, so that if you do a lifetime's work, it will deliver a pension above the basic level of means-tested support.
	That is it. We would not abolish the pension credit, but we want to see a pension with a value higher than that of means-tested support. We welcome the Secretary of State's conversion, but it would be great to hear the Chancellor endorse his colleague's analysis of what is wrong with our pensions system.
	Conservative Members look forward to a constructive and reasonable debate about how we can gradually get pensioners off means-tested benefits, create incentives to save and tackle the problem of the 1.7 million pensioners who are entitled to pension credit but do not claim it. The objective should be to get a basic pension with a value higher than that of the pension credit, which is why we endorse the imaginative thoughts advanced by the Secretary of State for Work and Pensions. It is slightly unfortunate that those thoughts are not yet official Government policy, but given that the Chancellor is aware of his Secretary of State's strong views, it is only a matter of time.

Alan Johnson: The debate has been interesting and informative. At the outset, we found out that the right hon. Member for West Dorset (Mr. Letwin), the shadow Chancellor, has been a long-time advocate of independence for the Bank of England setting interest ratesit was fascinating stuff. He presumably argued the case at dinner parties all over north or south London, and perhaps he grabbed strangers on long train journeys to tell them that it was the thing to do. When he entered the House as a Member of Parliament and went through the Lobby, however, he voted against independence for the Bank of England.
	The Chancellor ate the shadow Chancellor alive, but left a little bit over for cold sandwiches tomorrow.

James Gray: Will the Secretary of State give way?

Alan Johnson: Not yet; I will later.
	The hon. Member for Twickenham (Dr. Cable), who is just taking his seat, gave a winsome and ruminative little speech in which he acknowledged the success of our economic stewardship, but expressed scepticism, if not disparagement, about the research and development tax credit. He continued his party's vicious and sinister vendetta against the Department of Trade and Industry. He might like to know that when I was a Minister at the DTI and that policy first emerged, I went to tell my staff, because I thought that they should know about it. I said, Look, if there's a Lib Dem Government you're going to lose your jobs. They took that as a guarantee of job security, which was not what I intended to convey.
	My right hon. Friend the Member for Dumbarton (Mr. McFall) spoke eloquently about the need to meet the challenge of the huge investment in science and skills that is taking place in the Asian economies. He used his enormous expertise and experience in this field to warn us of some of the problems that we will face.
	My right hon. Friend also talked about means-testing, comparing its use as a means of targeting pension credit with what went on under the previous Governmentnever mind going back to the '30s. Let me make this absolutely clear to the hon. Member for Havant (Mr. Willetts), because he invited me to do so. When we came into Government we found that 2.8 million pensioners were living in abject poverty. The Conservatives are experts on pensioner poverty, but unfortunately experts on creating, not alleviating, the problem. Those 2.8 million pensioners needed help and assistance immediately. The hon. Member for Havant argues, in effect, that we should have told themmany were in their eighties, and two thirds were womenthat the problem with giving them the kind of income increase that they really needed was that it could create a savings disincentive in future. I find that argument incredible. In government we have tackled the real pensions crisis, and we should be proud that we have reduced absolute poverty for pensioners by two thirds and taken 1.8 million pensioners out of poverty.
	I do not accept that a 32-year-old accountant in the City who is looking at a lump of money and deciding whether to go to Lanzarote for a fortnight, spend it on a new car or put it into a savings scheme says, Hold on there's this thing called pension credit that may well affect my savings in years to come. In fact, it would be a good thing if people looked that far ahead.

Andrew Selous: rose

Alan Johnson: I will take interventions from Members who were in the Chamber during the debate.
	I do not accept that we are looking at marginal tax rates of 40 per cent. Under the previous Government, the marginal tax rate on benefits was 100 per cent.pound for pound withdrawal. But when we introduce a system whereby there is, for the first time, a 40p in the pound withdrawal rate so that people are not penalised for their savings, we are told that it is a tax. It is a strange tax that pays people moneyan average of 41 a week with 1,000 arrears to 3.2 million pensionersbut it is certainly one of which we will be proud to take ownership.

Howard Flight: May I point out to the Minister that our proposals do not involve abolishing the pension credit? How does he explain the fact that there has been a huge increase in the number of people without private sector pension savings? It has gone up to nearly 11.5 million peoplevirtually half the labour forceand has risen very substantially since the pension credit.

Alan Johnson: I shall deal with that shortly. The hon. Gentleman made a thoughtful contribution and I shall tackle his point. Let me address his first point. The policy of Her Majesty's official Opposition is to restore the earnings link. Several hon. Members said that we should accept that, if we are to work, perhaps in a bipartisan way, genuinely to tackle the problems that the Pensions Commission set out, we must ensure that pensions are fair, equitable, attack pensioner poverty and sustainable, not only now but in future.
	At the beginning of the debate on the Queen's Speech, my right hon. Friend the Member for Newport, East (Alan Howarth) intervened on the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) to say that Conservative policy on restoring the earnings link would mean a commitment of 98 billion in 2050. The right hon. and learned Gentleman replied:
	I think that . . . pensioners are more interested in the real difficulties that they face today than in what might happen in 2050.
	I despair. If the Conservative party does not consider the sustainability of its policy, it betrays future generations of pensioners and taxpayers.
	Of course, the Conservative party removed the link with earnings. The hon. Member for Havant said only two years ago that restoring the earnings link would be an expensive error, but more recently he said that withdrawing the link had been a mistake. However, when it was pointed out to the Leader of the Opposition that he was a member of the Cabinet when the earnings link was withdrawn, he said:
	It was the right thing to do then, and restoring the link is the right thing to do now.[Official Report, 23 November 2004; Vol. 428, c. 17.]
	When will it be the right time to break the link again? It is already unsustainable, not only in 2050 but in four years. There is a gap of 500 million in Conservative funding plans. Conservative Members say that they will sustain the link for four, not five years.

David Willetts: rose

Alan Johnson: I shall let the hon. Gentleman explain his policy. However, I say to the hon. Member for Arundel and South Downs (Mr. Flight) that the Conservative party, on its figures, will send pensioners backwards from pensions of 20 per cent. of average earnings to pensions of 16 per cent. of average earnings.

David Willetts: If the Secretary of State wants a rational debate on long-term costings, we need to know the Government's estimate of the long-term cost of increasing the pension credit by earnings from now to 2050. During that time, it will spread to more than three quarters of pensioners. Does not he accept that outside estimates of the cost reach 120 billion a year? That is why I said earlier that we need a grown-up recognition from the Chancellor of the cost of his policies. We could then have a rational debate.

Alan Johnson: That is fascinating. In the Queen's Speech debate a week ago, the Leader of the Opposition said that the important issue is what pensioners want now, not in the future. Today, the hon. Member for Havant says that what happens in future is important. We have said that we will link pension credit to earnings for this Parliament.

David Willetts: Then?

Alan Johnson: The hon. Gentleman must wait and see what happens in future Parliaments, but we are committed to eradicating pensioner poverty. The Conservative party, having created that poverty, now espouses a policy whereby poorer pensioners will go backwards rather than forwards.
	The hon. Member for Arundel and South Downs is one of a brigade of former shadow Chief Secretaries who have popped up today. He made a point about private pensions, which he repeated in his intervention. There are two points to make.
	First, the hon. Gentleman tried to argue that the reforms to advance corporation tax created the problem. The Turner commission did not reach that conclusion. It pointed out, among other things, that in the 1980s, a Conservative Chancellor insisted that pension funds could not be funded by more than 5 per cent. above 100 per cent.setting a 105 per cent. capand created a problem that forced pension funds to get rid of surpluses because they could not put any more money into the funds. That point was made earlier. The hon. Member for Arundel and South Downs, in seeking to use that argument, forgets that many companies during the 1980sredundancies then and in the early '90s were running at 16 for every 1,000 workers, whereas they now run at four for every 1,000had to raid their pension funds to pay for early voluntary retirement. That is a major reason for the current problems.
	The hon. Gentleman also talked about the wonderful worldthe nirvanain which we lived during the late '90s. The Turner report calls that a fool's paradise and makes it absolutely clear that these problems started in the early '80s. Anyone who thinks that we inherited a wonderful position for pensioners should remember that they were in abject poverty and that there was mis-selling of pensions. Pensions had gone up only once in 18 years. Why did they go up? They went up because the previous Government put VAT on fuel. To suggest that that was a wonderful world for pensioners is pretty perverse.
	A good contribution was made by my hon. Friend the Member for Ochil (Mr. O'Neill), who raised the important point about the lack of trust in financial institutions, which is an issue that needs to be overcome. He also referred to the fragility of the engineering supply chain and the importance of retaining fiscal incentives.
	The hon. Member for Gordon (Malcolm Bruce) has a fabulously named constituency; it seems that people are now naming their constituencies after my right hon. Friend the Chancellor. The hon. Gentleman spoke well about the need for further liberalisation of the European Union energy market and said that the Queen's Speech is an election gimmick. I concede that his party does not know much about Queen's Speeches, but it certainly is an expert on election gimmicks.
	My right hon. Friend the Member for Llanelli (Denzil Davies) made an extremely important point about the Government's strong economic record.
	When the hon. Member for Hertford and Stortford (Mr. Prisk) made his speech, my hon. Friend the Economic Secretary to the Treasury, who was sitting next to me, said that it showed what a loss the hon. Gentleman is to the Opposition Treasury team. He made a thoughtful speech and, although I do not agree with him, he is a doughty defender of small businesses.
	We heard good contributions from my right hon. Friend the Member for Coatbridge and Chryston (Mr. Clarke) and from the hon. Member for Sheffield, Hallam (Mr. Allan), who made a good point about IT and spoke knowledgeably on the subject. In fact, he spoke so knowledgeably that I am thinking of hiring him to work with me at the Department for Work and Pensions.
	Indeed, today, I sent an explanation of what happened last week to the hon. Member for Havant; it might be an inverted analogy for what is happening in today's Conservative party. We were doing a software upgrade and it all went wrong, but our mainframes were not affected. In the Letwinisation of the Conservative party, the Opposition are attempting a software upgrade, but unfortunately their mainframes have collapsed completely.
	I am sorry that I cannot cover all the contributions made by right hon. and hon. Members in what has been an important, entertaining and interesting debate.
	This Government have built a legislative programme that embraces the challenges of the future. It is built on the foundations of economic stability and prosperity; the longest period of sustained economic growth on recordgrowth every quarter since 1997; the lowest inflation and lowest sustained interest rates for 30 years; and unemployment at its lowest for a generation with 2 million more people in work since 1997. We all remember that Roger McGough turned a newspaper headline into a great three-line poem. The headline was, Conservative Government Unemployment Figures; the poem was, Conservative Government. Unemployment? Figures.
	I commend these measures to the House.

Question put, That the amendment be made:
	The House divided: Ayes 149, Noes 380.

Question accordingly negatived.
	Amendment proposed: at the end of the Question, to add:
	but regret that the Gracious Speech contains no commitment to introduce legislation to clarify the responsibility of the Prime Minister to Parliament, particularly in relation to the prerogative powers and the role of Parliament in matters of war and peace; and call for a special Select Committee of the House to consider these matters..[Mr. Stunell.]
	Question put forthwith, pursuant to Standing Order No. 33 (Calling of amendments at end of debate), That the amendment be made:
	The House divided: Ayes 68, Noes 443.

Question accordingly negatived.
	Main Question put:
	The House divided: Ayes 295, Noes 200.

Question accordingly agreed to.
	Resolved,
	That an humble Address be presented to Her Majesty, as follows:
	Most Gracious Sovereign.
	We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom and Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
	To be presented by Privy Councillors or Members of Her Majesty's Household.

PETITIONS
	  
	Traveller Sites

Bernard Jenkin: It is my privilege and honour to present a petition bearing more than 1,000 names taken in my constituency. It expresses the anger and frustration that many people feel about the Government's disjointed policy on Travellers' sites and travelling people. The petition states:
	To the House of Commons
	The petition of residents of North Essex,
	Declares that Colchester Borough Council and Essex County Council have been forced to consider locating permanent travellers' sites on greenfield areaswhere no development would normally be allowed and which would damage the value of surrounding propertiesbecause, in the absence of a designated site, travellers and others have acquired excessive rights to occupy and spoil private land in the area.
	The petitioners further declare that Colchester Borough and Essex County Councils should reject proposals for a travellers' site at Severalls Lane or the Crown Interchange just north of Colchester.
	The petitioners therefore request that the House of Commons calls upon the Deputy Prime Minister to introduce legislation to enable local councils to protect the interests of those they are elected to serve, including genuine travelling people, by transferring to local councils complete responsibility for Travellers and their activities within their local areas.
	And the petitioners remain, etc.
	To lie upon the Table.

Primary Schools (Stevenage)

Barbara Follett: It is my honour to present a petition on behalf of 11,000 residents of Stevenage who wish to express their anger and dismay at the actions taken by Conservative Hertfordshire county council to try to close four schools in the southern half of Stevenage.
	The petition states:
	To the House of Commons.
	The Petition of residents of Stevenage,
	Declares that the consultation document 'Raising achievement in Stevenage, reducing the Number of Primary Places' proposes the closure of Longmeadow Infant, Longmeadow Junior, Burydale Junior and Shephall Green Infant and Nursery Schools and the establishment of a new school on the sites of Burydale and Longmeadow. The Petitioners reject this proposal on the grounds that the consultation process was flawed.
	The Petitioners therefore request that the House of Commons urge the Secretary of State for Education and Skills to ensure that further consultation on the future of primary education in Stevenagetaking into account demographic projections and other optionsis undertaken.
	And the Petitioners remain, etc.
	To lie upon the Table.

CORONERS' COURTS

Motion made, and Question proposed, That this House do now adjourn.[Ms Bridget Prentice.]

David Kidney: No one could reasonably say that coroners' courts are not important. When the Harry Stanley inquest said that Mr. Stanley was unlawfully killed, it threw into crisis the whole of the Metropolitan police's armed police response in London. When the coroner in the inquest on Joseph Scholes' death wrote to the Home Secretary requesting a public inquiry, it cast a spotlight on the dangers of suicide when we lock up children in detention. If our system for registration of deaths and coroners' investigations is inadequate, the impact can be severe. To illustrate, I pose this question: could we not have detected sooner the murderous activities of the general practitioner Harold Shipman? I add immediately that the third report of the Shipman inquiry made it clear that it was not the individuals working in the system who were to blame for Dr. Shipman's long run of murdering patients in Hyde, but the system itself.
	I asked for this debate precisely because coroners' courts are important. Alongside the registration of deaths, they should provide a reliable system for collecting data on deaths and monitoring trends in deaths. They should provide an adequate investigation into suspicious deaths, to uncover wrongdoing or to provide reassurance as appropriate. They should provide also a thorough and sensitive service for the relatives of those who die suddenly and unexpectedly. Indeed, they should provide advice and guidance to us all on how to prevent avoidable deaths. They should provide the means of dealing with inquiries into mass deaths after major disasters.
	The present system does not have the appearance of a modern and effective service able to respond to public concerns over deaths, whether of individuals or of groups, and to command public confidence. Nor does the Government's response to the reports that have exposed the failings of the present system and made recommendations for reform, which I shall come to, suggest that they are giving to the improvement of the system the priority that its importance demands.
	In criticising the current state of the system for registering deaths, investigating them and holding inquests, I am not making any adverse judgment on the 120 or so coronerstheir number fluctuates, but there are 23 full-timersand their support staff and investigators. I am sure that most of them are hard-working and dedicated, but they are working with statutory powers and procedures that were established in a different era.
	It is my case that there are serious and obvious flaws in the current arrangements, and that those have been drawn repeatedly to the Government's attention, yet the Government have not acted to put them right with the urgency that the situation requires. Action is required at two levels, legislative and administrative. I can understand that securing a slot in the Government's legislative programme may take time, but there is no reason why the urgency of the need for change cannot start to be met by administrative actions straightaway.
	I move on to the reports that show the need for reform. I shall call the first one the Luce report, after Mr. Tom Luce, the former head of social care policy in the Department of Health, who chaired the review team for the report called Death Certification and Investigation in England, Wales and Northern IrelandThe Report of a Fundamental Review 2003, Cm. 5831. At the front of the report is printed the review team's letter to the Home Office, dated 28 April 2003, which states:
	During the last three-quarters of a century, the Government has twice commissioned reviews of these subjects, in 1936 and 1965. Very little happened in response to their reports. The services are showing the consequences of this neglect.
	The first lines of the report read:
	The systems in England, Wales and Northern Ireland for the certification of most deaths by doctors and the investigation of others by coroners have been seriously neglected over many decades. They must undergo radical change if they are to become fit for the purposes of a modern society and capable of meeting future challenges. The need for reform is widely recognised and supported.
	I would add to that that there are other high-profile cases that demonstrate the need for an effective system to be in place. I have already mentioned the case of Harold Shipman, whose unlawful killings were counted in hundreds. To that I would add great disasters like the Bowbelle/Marchioness incident, and more recently the rail crashes at Ladbroke Grove and Potters Bar.
	In addition to these obvious demands for a modern service there are linked issues demanding a strategic response from a modern coroner system. For example, article 2 of the European convention on human rights is about a state's obligation to protect the lives of its citizens, which the courts have ruled implies an obligation to investigate deaths. There is the White Paper entitled Civil Registration: Vital Change, and registration changes are happening now. A more weighty inquiry is needed where there are deaths capable of causing serious damage to public confidencefor example, the death of the Government scientist, David Kelly. Perhaps not everyone appreciates this, but the Hutton inquiry into the allegations surrounding the death of David Kelly was also the inquest into his death, thanks to an addition to the Access to Justice Act 1999 that was well secured by my hon. Friend the Member for Hendon (Mr. Dismore).
	Most recently, the inquiries into the Shipman deaths provide more evidence for my arguments. The third report surveyed the present state of the coroners service and described coroners' resources as varying widely. It mentioned that some coroners worked from home. It describes a situation in which there is virtually no training, and the training that is available is not compulsory. It says that coroners operate in isolation, and receive little advice or guidance. There is no leadership structure and no reasonable process for complaints and appeals. In fact, a coroner's inquest can be challenged only through judicial review. The Shipman inquiry said that coroners should have consistent quality standards, training, leadership, a wider range of investigative methods and greater powers.
	As for handling of the reports in the media, an article in The Guardian on the Luce report carried the headline, Coroners face big shake-up after 800 years. It said that the report recommended a package of sweeping reformsbereaved relatives would have much stronger rights at inquest, and coroners would be able to deliver fuller verdicts. It talked about the forgotten coroner service, and pointed out that it needed radical change after decades of neglect. My hon. Friend the Under-Secretary of State for the Home Department, the Member for Wythenshawe and Sale, East (Paul Goggins), who will respond to the debate tonight, is quoted as saying:
	The shortcomings in the current system have been increasingly evidenced and it is essential that we build an effective, supportive and transparent system that commands public confidence.
	The Guardian began an article on the third report of the Shipman inquiry thus:
	All deaths, including those that do not appear suspicious, must be investigated to ensure that murders such as those committed by Britain's worst serial killer, Harold Shipman, do not go undetected.
	Dame Janet Smith, who presided over the inquiry, identified an urgent need for a more focused, professional and consistent approach to coroners' investigations. She said:
	There must be radical reform and a complete break from the past, as to organisation, philosophy, sense of purpose and mode of operation.
	In a joint statement, the Home Secretary and the Secretary of State for Health said that work was already under way to identify how best to reform the coroner system.
	Eventually, in March this year the Home Office produced a position paper proposing a coherent system based on full-time coroners with legal qualifications, closely supported by appropriate medical expertise, together with tighter rules for death certification, notification of all deaths to coroners and stronger support for scrutinising cases and investigation where necessary. A coroner and burial team was set up. In a news release, the Minister said:
	The proposals outlined today will introduce a new system that will combine an independent check on all deaths and a professional oversight of death patterns with, for the majority of cases, the minimum of bureaucracy.
	A BBC news report on the Home Office plans suggested that those changes had taken place. It said that all deaths would be referred to an independent medical examiner and that a wide-ranging review would result in the numbers falling from 127 part-time coroners to a total of 40 to 60 full-time coroners. Coroners have been handed new powers to seize documents, and the reforms will change the way in which verdicts are recorded, doing away with terms such as suicide and misadventure and replacing them with a short narrative account of the facts of the death.
	The Minister was reported as saying that the proposals would prevent an individual doctor from being able to ensure that someone was buried without any further scrutiny within the system. He said that that was a huge step forward. What has happened since March 2004, and what urgency has been ascribed to this policy area by the Home Office? In September the independent support group INQUEST described the position paper as aspirational and drew attention to the lack of clearly stated commitments. It expressed concern because any changes were expected to take place within existing budgets and without any new money. The Luce report, however, recommended a series of reforms which, it estimated, would cost an additional 10 per cent. over and above the current 70 million budget for coroners' courts.
	Will the Minister explain what has been done since March 2004? Which of the proposals in the position paper have been put into practice? What is still to be done before new legislation is introduced? The Luce report helpfully includes a section on what can be done without waiting for a new Act of Parliament. NHS doctors could be allocated to work in an advisory capacity with the registration service and local coroners. The existing coroners' rules could be changed to reflect the recommendations on the outcome, conduct and scope of inquests. The registration service, the Home Office and the chief medical officers could give guidance on the use of autopsies. Here I interpose that in the third report of the Shipman inquiry, it is said that the immediate resort to autopsies by coroners is undesirable, and some coroners' autopsies are seriously deficient.
	As further examples of what can be done now, a new charter of standards of service to families could be produced. Training programmes for coroners' officers should be introduced with some support from central funds, and the development of new training arrangements for coroners themselves could be started. Informal piloting of death certification changes could be started. A new coronial council could be appointed on an informal basis and asked to oversee progress with the reforms. That is an excellent idea. The report states on page 219:
	All these changes could be made in advance of new legislation and all would be very worthwhile.
	I am asking for reassurance. Will my hon. Friend the Minister reassure me and the public at large? I am talking about the relatives of those who die tragically in suspicious circumstances, in the custody of the state or in a terrible disaster; the technical and expert groups such as the Office for National Statistics, which collects and publishes the data on deaths, and the Health and Safety Executive, which has responsibility for preventing avoidable deaths at work; the organisations that work professionally with the coroners, such as doctors, police and prosecutors; and the media and all those who have a legitimate interest in the process and outcome of coroners' investigations?
	When will we have a modern coronial jurisdiction with national coherence? Will we have a standing rules committee, a coronial council and an inspectorate? Will we have a nationally consistent complaints procedure, an appeals process and compulsory training? Can my hon. Friend tell me that defects in coroners' powers as identified in the reports that have been published will be remedied, and that in future coroners will not solely be reactive, but will be able to investigate any death or group of deaths on their own initiative, making recommendations that may avert further deaths from similar causes in future?
	Can my hon. Friend tell me that in future, coroners will have the back-up that they need for expert medical input and effective investigations, and that families will by right have access to reports and to investigators, and that they will be accorded the assistance and the respect to which they are entitled throughout the investigative process, including at an inquest, if one is held? Will he tell me when all this will happen? Can he tell me that that will be soon? It is urgent. Can he tell me that the media will be able to report those actions as fact, because they will be fact?
	When my hon. Friend says that he remains committed to taking urgent action, when he reassures all those with an interest in the coroners' court system, especially the families of the deceased, the coroners and their staff, that he is constantly on their case, and when he says that he is determined to see through radical reform in a timely and cost-effective way, I will be satisfied that this debate is worth while, and that some good will come of it.

Ross Cranston: I congratulate my hon. Friend the Member for Stafford (Mr. Kidney) on securing the debate and putting the case for reform of the coronial system in a thorough and persuasive way. There is one aspect that I shall mention brieflythe Luce recommendation about bringing the coronial courts into line with the ordinary courts system, where there is a structured system of appeal.
	The issue was brought home to me about a year ago, when one of my constituents, a Methodist minister, was criticised by a coroner after a death outside his church. It is neither appropriate nor possible for me to go into the details, but when my constituent sought my advice, all I could say was that he could challenge the finding by judicial review, or possibly by getting the Attorney-General to support a High Court application. Neither course of action was practical, given the cost involved. Ultimately, the coroner was prepared to enter into correspondence with me, and at the end of the day my constituent and I felt that justice had been done. I urge my hon. Friend the Minister to recognise that this is an important issue, on which the agenda must move forward quickly.

Paul Goggins: I congratulate my hon. Friend the Member for Stafford (Mr. Kidney) on obtaining this debate and giving us the opportunity to discuss the important issue of the reform of the coroner service. He is clearly knowledgeable about the issue and, as my hon. and learned Friend the Member for Dudley, North (Ross Cranston) pointed out, he spoke eloquently and persuasively. I also welcome my hon. and learned Friend's contribution to the debate.
	I have been a Minister long enough now to have my earlier remarks quoted back at me. I have also been a Minister for long enough to know that it is a long way from a position paper to a fully reformed system. However, I agree that the issue is important. I reiterate the need diligently to follow through on it and again place on record my determination to do so.
	The coroner's office and death certification are, thankfully, places and systems to which we do not often have to go. When we use them, we may be upset and distressed, which is all the more reason why the Government need to ensure that the systems are reliable and effective. As my hon. Friend the Member for Stafford said, the system goes back many hundreds of years. It functions as well as it does largely because of the dedication and professionalism of the staff involved. I assert that we owe it to them and the wider public to modernise the system so that it is fit for purpose and fully effective.
	The Government set out our proposals for reform in the position paper that we issued in March this year. As we said then, our intention is to issue a White Paper early next year. The work undertaken by Dame Janet Smith, which is contained in her third report from the Shipman inquiry, and by Tom Luce, in the fundamental review he carried out on behalf of the Home Office, has been crucial in helping to inform and work out our proposals for the way forward. We need a system that is simple to understand and easy to run. We need to close any gaps that could be exploited by those who have criminal intent or who fail to provide proper care. In particular, we must do all we can to ensure that horrific crimes such as those carried out by Harold Shipman can never happen again.
	To do that, we must connect a number of different but associated systems, such as the registration service and arrangements for forensic pathology. In addition, we will also need strong links between coroners and health services. It is essential that we learn from deaths of all kinds and use that knowledge to prevent avoidable and unnecessary deaths. We must also make sure that the public have a better understanding of how the system operates.
	We plan to reform not only the coroner system, but the arrangements for death certification. New procedures to verify the fact of death will be introduced, and the system will be the same for all deaths, whether there is to be a cremation or a burial. We will also ensure much stronger medical oversight. The new system will mean that in future all deaths, whether or not they need to be reported to the coroner, will be reviewed by medically trained professionals based within the coroner's office.
	Those trained doctorsin the position paper, we call them medical examinerswill review the medical certificates of the cause of death in all cases. They will have new powers to call for supporting documentation and make any inquiries that they see fit in order to satisfy themselves that each death is properly certified and that there is no reason for a coroner's investigation. They will also need to be able to review cases as quickly as possible, so that our new procedures do not lead to delay and additional distress for the bereaved.
	Each medical examiner will be properly trained in death certification and will work full-time in fulfilling their duties. The checks that they make will be much more effective, and the availability of that additional medical expertise will assist lawyer coroners to interpret and understand the medical information about a death and the details of any medical treatment and procedures that the deceased may have been receiving prior to the death. All that will help coroners to decide what action they may need to take in each case. In turn, we expect that better medical information, and the greater competence and confidence it brings, to lead to a reduction in the number of post-mortem examinations.
	Families will have a crucial role in this reformed process. I know, not least from the consultations we have carried out, just how important it is for families to have an opportunity to provide information, to raise questions and to express their own views. Under our proposals, families will have new rights to receive information about a death and to challenge anything that seems to them to be wrong. Their views will also be taken into account when key decisions are taken about the investigation of a death. There will be new and more accessible opportunities to appeal such decisions. Although I cannot at this stage go into the details of that, I hope that my hon. and learned Friend the Member for Dudley, North will appreciate that we are committed to ensuring that families have more opportunities for redress.

David Kidney: I thank my hon. Friend for all that he is saying. The main complaints from families concern great delays in getting an inquest at all and difficulties in getting access to the investigator's report to the coroner. Can those matters be dealt with without the need for legislation, and can my hon. Friend promise that they will be dealt with soon?

Paul Goggins: Later in my remarks I will show how, under plans to develop a family charter, we want to share more information with families. Of course, we want to speed up the inquest system, although in our current system it is hard to do that in cases where coroners have a backlog of cases, with all the difficulties that that entails. We need to carry out the fundamental reform, but there are things that we can do now and we will continue to do so.

John Burnett: I am grateful to the Minister and to the hon. Member for Stafford (Mr. Kidney).
	In rural areas, there are sometimes very few suitable venues for coroners to hear their cases. Will the Minister lean on the Lord Chancellor and his Department when people who run the Crown courts, magistrates courts or county courts seek to oust a coroner from using a court although no suitable alternative accommodation is available?

Paul Goggins: I am aware that sometimes locating a suitable venue for an inquest can be problematic. That remains a responsibility for the local authority. None the less, in Government we do of course try to assist and support coroners where they have a particular difficulty. All they need do is approach us, and if we can help, we will.
	As all Members have emphasised, we have much to learn from the experiences of families. Indeed, some of the most instructive and compelling evidence that I have received came during two discussions that I was fortunate enough to have with the families of Harold Shipman's victimspeople who have more reason than most to know of the shortcomings of the present system and who expressed themselves to me with remarkable clarity and calmness given the circumstances. I am extremely grateful to my hon. Friend the Member for Stalybridge and Hyde (James Purnell) for arranging those important opportunities for me to meet them.
	Under our proposals we will, for the first time, have a national system to oversee all deaths. In order to provide focus and direction for that new service, we will create a new posta chief coroner, who will lead the service by setting and driving up professional standards, deploying coroners within the national service, and, where necessary, undertaking the most complex cases himself or herself. The chief coroner will also have statutory powers to give directions to coroners in the interests of consistency and good practice.
	There will also be a chief medical adviser, who will have particular functions in relation to the medical examiners and will ensure that the new service has access to the best possible medical expertise.
	The chief medical adviser will provide top level medical advice to the chief coroner and link the new service with the regional directors of public health, who will provide additional oversight and scrutiny.
	As I said earlier, we plan to publish a White Paper early next year. That will set out the basis on which we intend to legislateas soon as parliamentary time is availablefor a unified and reformed system.
	We are carefully considering the resources that we will need. My hon. Friend the Member for Stafford mentioned that. Our position paper expressed the hope that, in broad terms, the changes would be cost-neutral. Further detailed analysis suggests that there may be a need to identify further funding, over and above the blocks of funding that local authorities and the police allocate to the coroner service and coroners' officers. Given that those funding arrangements were designed to cope with around 200,000 deaths a year, while the new service will be required to deal with approximately 500,000, that should not be too surprising. We are, of course, examining the efficiency savings that will accrue.
	We are also considering some of the payments made in the current system, including, for example, the 30 million paid privately to doctors for providing certificates prior to cremation, to ascertain whether some of that money could help to improve the scrutiny that families clearly expect. All that will be clearly set out in the White Paper.
	As my hon. Friend said, we can do a great deal in advance of a fully reformed system and some of that work has already started. We are working closely with coroners to increase the focus of the service on bereaved familiesmany coroners already consult families as a routine part of their investigations. I am delighted with the way in which several coroners are taking that work forward. They are seriously considering the way in which families and others receive information about a death and how communications can be improved. I know that some coroners are reviewing the leaflets that they provide and are in discussion with groups and others who work with the bereaved to ascertain what improvements they could make.
	In the longer term, building on such work, we will develop a family charter to set out the service standards that can be expected throughout England and Wales. We are also promoting the sharing of good practice. Using modern techniques developed by the Coroners Society of England and Wales, coroners are already making far more use of each other's experience. At the Home Office-funded training courses for coroners, we are making sure that sharing good practice is built into each course.
	I pay tribute to the coroners for the way in which so many have made real strides in ensuring that their work and that of their staff meets the increasingly high standards that the public and central Government now expect. Working with local authority funders and local police forces, many coroners have made significant progress in their case management systems and their approach to inquestsespecially those that take a long time to arrangein reviewing their performance and making sure that they work closely with other local services. For example, many coroners have been actively reviewing the number of post mortems that they request, and others have been developing important new links with registrars and primary care trusts as well as with voluntary groups who can support the bereaved.
	As I explained earlier, the next milestone in our programme is publication of a White Paper. That will set out the details of our reform programme. We will need primary legislation to give us the powers that we need and we will also need to develop the necessary professional leadership in the form of a chief coroner and a coroners council.
	I reiterate the Government's full commitment to the delivery of fundamental coroner and death certification reform at the earliest opportunity
	The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr.   Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at thirteen minutes past Eight o'clock.